Energy Action : Emerging from Hibernation Sharpens Focus on Costs

Amid cautious optimism as lockdown restrictions ease and the post-pandemic recovery gets underway, many businesses are now coming out of hibernation.

For most businesses, the recent environment has brought about a renewed focus on lowering overheads in an effort to preserve jobs and sustain through ongoing economic uncertainty. Businesses that continue to face financial hardship can access a variety of relief measures available to them, visit [insert link] for further details. For others who are re-starting or scaling up operations, there's an opportunity to put in place practices that will help reduce costs over the longer-term.

Locking in low energy prices

One of these practices involves taking advantage of historically low energy prices, as COVID-19 restrictions suppressed demand across all states and territories. This, combined with renewables generation coming online, has weighed on wholesale electricity prices. In some cases, prices are at or below generators' marginal cost of production.

Commodity gas prices are also 50% lower than they were in late 2019, as producers increased supply in response to higher prices and domestic and international demand softened due to the COVID-19 crisis. This price fall has been seen across all state gas hubs.

For electricity, businesses have an opportunity to lock in significant savings through long-dated retail contracts, ideally out to 2023. For gas, where prices remain low and the wholesale approach means prices are less volatile but uncertain, there's a compelling case for companies to manage variable price contracts, to lower their costs.

There is also relative urgency if businesses want to lock in these savings. With COVID-19 restrictions easing, demand for energy is rising and in turn, prices are starting to increase. This is expected to continue as more businesses open their doors and the economy picks up pace.

Turning assets into cash

Beyond locking in attractive energy prices as operations ramp up, there are other options for businesses. This includes increasing energy efficiencies and for businesses with rooftop solar PV systems, harnessing those assets to boost your cash flow.

While there are a range of measures businesses can take to increase energy efficiencies, we understand that purchasing new equipment, lighting and other more capital-intensive steps may not be an option for all businesses in the current economic climate.

To help businesses unlock cash from their solar PV systems and receive a six months payment holiday for their solar energy in the process, Energy Action has partnered with Juice Capital to launch an innovative solar buy-back program.

Australian small businesses with behind-the-meter (rooftop) solar systems can receive a one-off cash payment for the sale of their solar PV system to Juice Capital, Australia's largest owner of commercial behind-the-meter solar PV systems. Businesses can then enter a behind-the-meter PPA with Juice Capital for the energy generated by their former PV solar system. They also reserve the right to repurchase their PV system at a later stage.

So, as we exit from a period of hibernation brought about by necessity or choice, businesses will be increasingly looking at how best to manage costs. When it comes to energy, now is a great time to lock in lower prices for longer-term benefit. And if you have rooftop solar and need to boost working capital, there are innovative options available to help you do just that.