Energy Prices are Surging
Energy prices are a hot topic right now. Europe is facing a record-breaking increase in energy prices that threaten to derail post-pandemic progress, put serious strain on family budgets, and even tarnish the green transition.
In the UK, it was recently announced that, for the average household, energy prices could increase as much as £693 this year. This staggering rise came as wholesale gas prices increased to about 300% higher than the beginning of 2021. These are levels never reached before in the UK.
But why exactly are gas prices so high?
Why Have Gas Prices Gone Up?
There’s been a surge in demand for energy as we come out of the restrictions due to the COVID-19 pandemic, combined with a reduced supply of gas on the global market. This has resulted in prices climbing to unprecedented levels.
Other factors exacerbating the rising gas prices include:
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- Weather conditions in Europe in 2020/21 were extremely cold which led to a higher-than-usual power demand, which put pressure on supplies and reduced the amount of gas reserves.
- Those gas reserves could have been topped up over the summer period. However, this wasn’t possible due to the windless summer which resulted in wind turbines producing less electricity. This, in turn, meant gas power plants had to burn more than normal.
- High demand from Asia (especially China). This put huge strain on liquefied natural gas supplies
And the situation could get even worse due to the current tensions between Russia and the West. After all, Russia is the largest gas supplier to the EU, providing about 40 per cent of its needs. The UK’s reliance is much smaller (at 3 per cent). However, the UK still imports a large proportion of its gas (approximately two-thirds) which is then subject to global price fluctuations. In this way, prices are more volatile and likely to increase.
Impact on Businesses
It’s not just households that will feel the strain of rising costs. Businesses will also be feeling the brunt of crippling energy costs too.
The high costs of these new bills will have serious consequences for their cash flow and bottom line, which is already under huge pressure due to the financial hardship associated with the COVID-19 pandemic.
In fact, two major production plants in Teesside and Cheshire in the UK have already had to shut down due to the price surge. The fertilizing manufacturing plants produced CO2 as a by-product, and it became too expensive to run due to the high natural gas prices.
And with prices not showing any signs of recovery any time soon, we can expect other businesses to also have to shut their doors, unable to cope with the hikes.
Industries that are major users of natural gas and electricity are likely to be hit worst. This includes companies that produce chemicals, steel, glass, ceramics, and so on.
It’s also important to note, that many businesses are on bespoke energy contracts that can expire at any point in the year. So, the worst is yet to come for many businesses when they find themselves falling off low contract rates onto high renewal rates.
Food and Beverage Sector and Energy Usage
Energy consumption in the process industries is also notoriously high. For example, the food and beverage industry is a sector that uses large amounts of energy for everything from refrigeration and heating to clean-in-place (CIP), cooking and much more.
Energy expenditures are costs that have been historically overlooked in many food and beverage plants. However, with energy costs at an all time high, along with increased competitive pressures, tighter margins and higher labour and production costs, manufacturers can no longer afford to do this.
That’s why many food and beverage manufacturers are prioritizing comprehensive energy programs to alleviate some of these pressures.
A technology that is in wide use in the food and beverage industry is liquid product recovery (“pigging”) technology. Pigging recovers residual liquid from process pipelines. It’s an effective way to reduce energy consumption, lower water usage, cut waste, reduce costs, and lower carbon emissions.
How Pigging Systems Reduce Energy Usage?
If you work for a company that pumps liquids or wet products, a hygienic and sanitary pipeline product recovery system can help you meet your carbon reduction targets.
Because HPS pigging systems recover so much product from the pipe, there’s no requirement for water and energy intensive flushing. In this way, pigging saves a considerable amount of product, water, heat, energy, and other resources. In some cases, a pigging process can eliminate the requirement for flushing altogether.
Even if flushing is still required, the amount of water, energy and resources needed is far less with a pigging solution. Therefore, pigging systems can help companies that process liquids meet their environmental and sustainability goals.
Companies That Process Liquids Benefiting from Pigging
As well as food and beverages, many other companies that process liquids are reaping the benefits of pigging systems. This includes cosmetics, pet food and household good processors, as well as companies that manufacture chemicals, lubricants, personal care, paint, coatings and a wide variety of other products.
While pigging can seriously help many businesses conserve water and reduce energy usage, unfortunately, if you don’t pump liquid or wet product through a pipeline, a pigging solution can’t help you.
However, there’s still several things you can do to improve your energy efficiency.
How to Keep Energy Bills Low
There’s lots of energy-saving measures you can potentially implement to cut your usage right down.
This includes thinking about how and when you’re using gas and electricity. So, consider switching appliances off when not in use, switching to energy efficient lighting, turning lights off when not in use or even installing light sensors.
You should also consider being mindful of water costs, ensuring your building is draught-proof and going paperless as much as you can to improve your energy efficiency.
However, it’s important to note, there’s still a minimum amount of energy you need to keep your business running, so you might still feel it on your cash flow and bottom line if energy rates continue to rise.
Time Will Tell
With rising energy costs hitting businesses as well as households, there’s a long and hard road ahead. Especially with many consumers and businesses already finding their energy bills unaffordable.
Unfortunately, it seems for now, high costs are here to stay. According to the chief executive at Centrica (the parent company of British Gas), there’s no reason to expect gas prices to come down soon. He also suggests that gas prices could potentially be high for the next 18 months to two years.
However, with energy being such a turbulent market, it’s extremely difficult to predict exactly what will happen with prices. Only time will tell.
Find Out More
If you work for a company that manufacturers liquids or wet products and would like to speak to one of our solution specialists about improving your processes through hygienic and sanitary pigging and liquid product recovery solutions, then please contact HPS.