Three Gas Tips to Optimise Your Total Energy Spend

14 Aug 2020

Home Three Gas Tips to Optimise Your Total Energy Spend

In these unprecedented times it is more important than ever to ensure you get the most from every pound your business spends. 

Brook Green Supply recommends three key areas within gas supplies that should be investigated to ensure your energy bills are kept to a minimum. 

TIP 1 - Contractual Volumes

We are currently seeing customers gas usage decrease drastically due to COVID-19 and additionally there is ongoing demand for businesses to improve their green credentials. In a market that continues to see rises in energy costs, a little extra time planning your future gas usage and contracted volumes could mean the difference between a balance sheet being in the black or the red. 

All too often suppliers, customers and energy consultants do not actively ensure future volumes are forecasted and base volume assumptions on previous years. Although no one has a crystal ball, going the extra mile to support accurate forecasting of gas usage will decrease the chances of finding any unwanted surprises on your gas bills. 

TIP 2 - Correct Gas Transportation

Your gas is delivered by a transporter and your gas bill includes their charges for this service. We are seeing dramatic increases in the value of this slice of your bill. The transporters’ pipes have limited capacity and a large proportion of the transportation charge is based on your required daily usage. Therefore, if customers and energy consultants do not review these quantities, it could lead to:

•    Under booking of transportation - Heavy penalties, known as Ratchet Charges, are imposed on Daily Metered customers who exceed their daily required gas quantities (referred to as your SOQ, Supply Offtake Quantity) through winter periods.  To avoid being penalised, review your required SOQs prior to your gas contract being signed but also throughout the contract lifecycle. You can confirm any expected deviations to your supplier who can request amendments directly with the transporters.  

For example, a Daily Metered client which has a daily requested capacity (SOQ) of 300,000kWh consumes 500,000kWh for one day in December, the client will be hit with a one-off penalty of over £65,000 and additionally their transportation cost for future years will increase by a further £32,000.* 

•    Overbooking of transportation - On the flip side, overbooking will lead to more gas capacity being booked than required and higher transportation charges than are necessary. 

For example, a site might have booked 500,000kWh of daily capacity in the pipes.   Due to the introduction of energy savings over the past few years the site now only needs 300,000kWh, even when incorporating a leeway allowing for a surge in consumption. The 500,000kWh SOQ is now unrealistic and if this is decreased with the transporter the client could see a 35% reduction in annual transportation costs.*  

Our view is that SOQs have still not been fully investigated by the industry, and it is a key exercise for customers to complete given the continuing increase in transportation costs.

TIP 3 - Gas to Electricity Generation Future Potentials 

Gas forms an integral part of the UK’s fuel mix, currently just over 40%** of electricity comes from gas-fired generation. The UK Government expects gas to continue to play a major role in the generation mix over future decades alongside low-carbon technologies.  Gas is an extremely flexible source of generation that only emits half the CO2 of coal. Gas will be needed to help decarbonise the UK and to help balance the relatively inflexible and intermittent low carbon technologies. 

CHP Plants located in industrial sites currently account for 6.1 GW*** of installed electrical capacity. With the advantages of a lower carbon footprint and revenue from flexibility schemes, your total energy spend could dramatically decrease. Therefore, it is important for industries to investigate their gas generation options. As energy systems become increasingly reliant on sustainable generation, flexibility will be the main driver of cost. This will mean that customers with flexible assets, such as CHPs, will receive healthy remuneration for providing flexibility into electrical grid systems. For this reason, Brook Green Supply has created a new innovations department which looks to optimise such plants. We see demand side flexibility as a key growth component for Brook Green Supply and Brook Green Innovations, as well as the UK energy sector as a whole. 

Please do not hesitate to contact your Account Manager or our Energy Solutions Manager if you have any queries or require any further information. 


Written by Cynthia Grainger - Energy Solutions Manager 
Brook Green Supply 
D: +44  020 7870 4960
sales@brookgreensupply.com

References
* Oct 19  transportation calculator  
** Digest of UK Energy Statistics 2019 Press Notice  
***CHP Generation Statistic 2019
CHP Plants - Combined Heat and Power Plants
SOQ - Supply Offtake Quantity

Insight Disclaimer

The information provided in this insight article is intended for Brook Green Supply Limited clients and subscribers only. The content is provided and intended for general information purposes only. All pricing stated in this insight article is indicative, at the time of writing, and may not be attained in trading at any time after report publication. For the avoidance of doubt, Brook Green Supply Limited does not represent or endorse the accuracy or reliability of any of the information or content, expressed or implied, nor are we acting in any capacity as a fiduciary to you. Recipients of this insight article must not rely on the information and are advised to take any necessary steps to validate such information, independently assess the economic risks and merits and make your own assessment, or appoint appropriate advisors, on any legal or tax consequences before acting upon it. Under no circumstances will Brook Green Supply Limited have any liability for any loss or damage caused by dependence on any information contained within this insight article. Please contact our execution and solutions desk via tradingdesk@brookgreensupply.com for further information.

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