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Energy Price, Supply Volatility Impacting Businesses

Energy Prices
(Credit: Pixabay)

Nearly all corporations that participated in a recent survey by Schneider Electric say they were impacted by recent energy price and supply volatility, with most also saying they weren’t prepared for that unpredictability.

In the survey of corporations earning more than $250 million annually, 92% say they have been impacted by fluctuations in energy costs and supply. Of those 67% say they were not ready to face the energy problems and 18% ranked their efforts as “extremely effective.”

A big part of the volatility in the energy market is coming from demand outpacing supply, according to Schneider Electric. Respondents also say supply chain issues from COVID-19 are still impacting energy sources, as well as geopolitics.

As a result, nearly half the organizations say they have been working on risk management for sourcing and procuring energy.

Corporate energy funding has seen a slowdown through the first half of 2022, according to Mercom Capital Group, down 11% year over year. Renewable energy prices are also rising, and the prices of power purchase agreements were up 5.3% in the second quarter, according to LevelTen Energy, in part due to inflation.

Natural events continue to have an impact as well, such as power crunches in Texas due to extreme heat.

Despite those numbers, responses varied on just how much energy fluctuations impacted a company’s operations. Nearly a quarter say the situation has severely affected their business, but 31% say the impact has been minimal.

To tackle potential energy impacts, many of the businesses are searching for different ways to manage their energy use. Most are implementing or planning to implement different energy tools such as increased renewable energy or microgrids as well as deploying energy efficiency measures.

Companies are also working with third-party energy advisors and analyzing energy response procedures.

Respondents say the biggest future impacts on their industry or supply chains are in budgeting, with 43% saying that could be a potential problem. Nearly a third say the future energy impacts could be on their overall operations.

Despite the energy concerns, more than half the respondents to the survey say they are extremely or considerably confident in their organizations’ ability to manage energy costs both in the short term and long term. Less than 5% of respondents were not confident at all that they could manage those costs.

Overall, 49% say their organizations will be extremely or considerably effective in their ability to manage energy price and supply volatility.

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