Not Just Hot Air - Episode 2

The Gas Market: Trends, Incentives, and Impact on Businesses

Introduction

We are back with our latest blog taken from our “Not Just Hot Air” podcast, where we delve deep into the world of the gas market. In this edition from the end of last year, we discuss the trends and drivers of change in the gas market, as well as the challenges and opportunities it presents. The guests this time round were Phoebe and Josh from the team here at Pilot Group, who will share their insights and expertise on this topic.

Electricity in office

About Our Guests Phoebe and Josh

Phoebe is an account manager here, with over six years of experience in the industry. Her role involves growing new business and maintaining existing relationships, (as we mentioned last time, it’s worth checking out her impressive track record in the industry). Josh, on the other hand, is the Head of Marketing. He is responsible for communicating the company’s message, creating the content and getting in front of potential customers.

The Journey to Net Zero

In a previous episode, we discussed the considerations for owners of large industrial warehouses who are thinking of transitioning from gas to renewable energy. We discovered that the decision is not as straightforward as it may seem, with both options having their own pros and cons. This led us to explore how industries can work towards achieving carbon/ net zero and the various government schemes and incentives available to support this transition.

The State of the Gas Market

Currently (and for a fair period now), the gas market is facing a challenging time. Prices have been volatile, and there are no guarantees in terms of stability. As we approached the end of last year, many businesses were searching for new contracts, which can lead to further price increases.

It is looking like the gas prices will never go back to the lows they were but there is potential of them steadily lowering but for this year, prices may stick around where they are at (we are not market analysts but just sharing information picked up working in the industry, for accurate data please head to a variety of market analysts). However, despite the uncertainties, there is a growing awareness of the need to reduce gas consumption and carbon emissions.

The Importance of Consumption Efficiency & Exploring Alternatives

While gas prices may fluctuate, businesses have control over their own consumption and it is essential to evaluate and optimise energy usage to minimise costs. Simple measures, such as reviewing operating hours and addressing equipment inefficiencies, can lead to significant savings. By focusing on consumption efficiency, companies can make a positive impact on their bottom line, it’s not just a box ticking exercise.

For some businesses, exploring alternative energy sources, such as green hydrogen or bio-options, may be viable. However, the practicality and cost-effectiveness of these alternatives depend on the specific scenario, the type of buildings and equipment involved. In many cases, replacing gas heating systems with electric alternatives may not be economically feasible or result in significant energy savings.

The Holistic Approach to Energy Management

When considering energy reduction and emissions, it is crucial to adopt a holistic approach. Simply replacing gas with electricity does not eliminate the reliance on fossil fuels, as the grid still relies on a percentage of non-renewable energy sources (you can see a live picture of this on the national grid website). Businesses must look beyond fuel type and focus on overall energy management, including optimising equipment, reducing waste, and exploring energy-saving projects.

Uncovering Cost Savings and Consumption Reduction Opportunities

Surprisingly, many businesses discover that significant cost savings and consumption reductions can be achieved through simple measures. Often, it is a matter of revisiting equipment management and controls. Many businesses overlook or neglect to update their systems, leading to inefficiencies and unnecessary energy consumption. By addressing these issues and providing support and solutions, companies can make meaningful progress towards their energy and cost reduction goals.

A frequent example of this that we see is the energy efficiency rating of industrial heating units. When they are serviced, the service sticker should show an efficiency rating as a percentage, giving you an indication if they need replacing. On top of that, behavioural change can go a long way, getting your team on board or incentivising/visualising reduction makes it real.

The Impact on Businesses

The volatility of the gas market has had a considerable impact on businesses, especially those operating on slim profit margins. The increase in energy costs can have a significant financial burden, requiring businesses to generate additional revenue to cover the rising expenses. This highlights the importance of proactive energy management and finding effective ways to mitigate the impact of increasing costs.

As an example, if a manufacturing business working on a 5% profit margin sees an increase of £100,000 to their energy bill, they would need to increase sales by £2 million just to cover this.

The Role of Heating Systems & Benefits of Energy Management Systems

Heating systems play a crucial role in energy consumption for many industries, particularly manufacturing. However, finding alternative solutions to gas heating is not always straightforward, especially for established buildings with specific requirements or layouts.

The cost difference between gas and electric alternatives can be substantial, making it challenging for businesses to justify the switch without a significant return on investment. It makes for difficult decisions and/or trade offs between staff comfort levels, investment to reduce carbon emissions and simply cost-saving.

Implementing an energy management system can provide businesses with valuable insights and tools to optimise their energy usage. By monitoring and controlling various aspects of energy consumption, you can identify inefficiencies, reduce waste, and make informed decisions. These systems offer a quick win for businesses looking to make immediate cost savings and reduce their environmental impact.

Having installed a variety of EMS over the past 20+ years we have seen motivating factors from pure cost savings through to standardising energy management across a multi-site portfolio and more. Once the motivation is understood it can help guide towards the system that will work best.

The Way Forward & Closing Thoughts

In conclusion, the gas market is currently facing challenges and uncertainties that we are all aware off but can often find it hard to predict. However, businesses can take control of their energy consumption and reduce costs by implementing energy management systems, improving control strategies and optimising their equipment.

While transitioning to alternative energy sources may be suitable for some, it is essential to consider the specific circumstances and costs involved. By adopting a holistic approach to energy management, businesses can make meaningful progress towards net zero and navigate the ever-changing gas market.

Thank you for checking back in for the latest blog taken from our podcast “Not Just Hot Air.” We hope you found the points from our discussion informative and insightful. Stay tuned for future episodes where we continue to explore various topics related to energy and sustainability, brining in some special guests.

Interested in finding out how much you could save with an energy management system? Check out our savings calculator here.


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Pilot Group Limited,
15 Carnarvon Street,
Manchester M3 1HJ
+44 (0)333 034 2104

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