The constant fluctuations of energy prices are becoming a significant risk for manufacturers. Higher energy prices can cause supply chain disruptions and regulatory changes. This makes it difficult for these companies to stay competitive. Here’s why it’s a growing concern and how manufacturers can mitigate its impact.
Why energy market volatility Is a growing risk for manufacturers
Fluctuating energy prices
Recently, there have been many issues with global geopolitical tensions, extreme weather events, and shifting supply-demand dynamics. All these factors are causing unpredictable energy price swings. Rising costs directly impact manufacturing expenses, affecting profitability and product pricing.
Supply chain disruptions
Energy shortages or sudden price hikes can lead to operational downtime, delays, and increased transportation costs. Dependence on specific energy sources, such as natural gas or oil, makes companies vulnerable to disruptions.
Competing in the wider market
High energy costs are making it increasingly difficult for businesses in the manufacturing sector to compete with the wider market across the EU. A lot of businesses have expressed concerns that stakeholders are going to take their investments elsewhere if these energy-intensive businesses don’t get support with high energy costs.
ESG and Sustainability Pressures
Investors, consumers, and stakeholders demand greener operations, which may require costly transitions to renewable energy sources. Companies failing to adapt risk reputational damage and financial penalties.
How manufacturers can mitigate energy market volatility
Diversify energy sources
Businesses within the manufacturing industry can invest in a mix of renewables (solar, wind) and traditional energy to reduce dependency on volatile markets.
One of the best ways to start implementing renewable energy options is to explore on-site energy generation. Investing in renewables, such as solar panels, can reduce your company’s reliance on the grid.
Energy procurement strategies
If your manufacturing company is struggling with high energy costs, it might be a good time to enter long-term energy contracts to lock in stable prices.
To do this effectively, you must have a good energy procurement plan that ensures cost savings and stability for your company.
Enhance demand flexibility
Another strategy that manufacturing companies can try is to, shift energy-intensive operations to off-peak hours to take advantage of lower rates.
Implement demand response programs that adjust usage based on real-time energy prices. By doing this, you will save your company money in the long run. Consider installing a smart meter to help better manage this strategy.
Invest in smart technologies
Another way your manufacturing business could save on costs is by using monitoring systems to predict and manage energy needs efficiently.
Leverage the data analytics for proactive decision-making on energy procurement.
Consider working with a broker
Collaborate with energy brokers to negotiate better rates and ensure reliable supply. Energy brokers have a good insight into the energy market and strong supplier relationships. By utilising the help that energy brokers have to offer, your company could save thousands on their energy bills. If you would like to find out more about the help energy brokers have to offer, get in touch with us today!
Manufacturers must take proactive steps to mitigate energy market volatility through diversification, efficiency improvements, financial strategies, and technology adoption. By doing so, they can reduce operational risks, maintain profitability, and enhance sustainability in an increasingly unpredictable energy landscape.
If you're looking to save money on your energy bills then why not get in touch today? The relationships Resolve Energy has developed with over 24 of the UK’s biggest business energy suppliers allows our energy experts to source the best business energy rates available for your company right when you need them. Request a free quote today and start saving money on your energy.
