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Stabilizing energy costs in a volatile market

21 March 2024

When we flip a switch, indoor lighting comes on with nearly the same dependability as the sun rising. This makes sense; the outside world lights consistently, and so should our buildings and businesses. However, when we check energy costs for the year, the ups and downs are anything but consistent. The energy market is more like spring weather. It changes almost daily.

Understanding energy market volatility

Energy market volatility is a result of various interconnected factors, including geopolitical tensions, supply chain disruptions, regulatory changes and demand. Some of these are predictable. For example, in the heat of summer day air conditioning demand is going to peak, taking prices up with it. Other factors, like unexpected conflicts that slow down supply chains or regulatory changes that limit certain suppliers can strike unexpectedly at any time of the year. Businesses, much like investors in a turbulent stock market, need to be adept at adapting their strategies to these dynamic conditions.

This volatility presents challenges for businesses aiming to manage costs and keep to a consistent budget. Your electricity costs shouldn’t be raising your eyebrows every other month. Like reigning in a horse, effective management takes skill and know-how, but it can be done. Let’s explore practical strategies for businesses to navigate and mitigate the impact of energy volatility.

1. Transitioning to sustainable energy

One effective strategy for businesses to counter energy market volatility is transitioning to sustainable energy sources, such as solar and wind power. Unlike traditional fossil fuels, these sources offer a more stable and predictable energy supply. This shift not only contributes to environmental sustainability but also provides businesses with a reliable and consistent energy source, shielding them from the price fluctuations associated with conventional energy.

Investing in solar panels or wind turbines represents a proactive step towards energy independence. By generating their electricity, businesses can reduce their exposure to external factors contributing to market volatility. This move not only aligns with environmental goals but also offers a long-term solution to the challenges posed by the unpredictable energy market.

Another benefit is that innovative technology makes sustainable energy cheaper. Because of increased environmental concern associated with fossil fuels, taxes on these energy sources are increasing. Transitioning to sustainable sources and electricity providers will set you up for consistent energy availability down the line.

2. Leveraging energy consultants for informed decision-making

Another practical approach for businesses to navigate energy market volatility is enlisting the services of energy consultants. These professionals specialize in analyzing energy consumption patterns, conducting audits, and providing tailored strategies to mitigate risks. Rather than sailing blind in the volatile energy seas, businesses can leverage consultants’ expertise to make informed decisions about energy consumption and cost management.

Energy efficiency consultants act as objective advisors, helping businesses understand market trends, regulatory changes, and potential risks. Their insights enable businesses to develop strategies that align with their specific needs, promoting resilience in the face of market fluctuations. They will offer strategies and tips tailored to your business that will smooth over energy market volatility and lower costs overall.

Some of the broad financial strategies include:

1. Comprehensive price risk management

Implementing a comprehensive price risk management system enables businesses to manage their budget effectively. This involves utilizing financial instruments such as hedging contracts to mitigate the risk of price fluctuations, providing a degree of stability to their energy expenses.

2. Monitoring the energy market

Keeping a close eye on the energy market is essential for businesses seeking to navigate volatility. Regularly tracking energy prices, market trends, and regulatory changes provide timely information on risks and opportunities, allowing for proactive adjustments to energy consumption strategies. Hiring a consultant makes this information readily available. They can also help you interpret data and make decisions based on current conditions.

3. Regular review of energy portfolios

To maintain resilience in the face of energy market fluctuations, businesses should regularly review their energy portfolios. This includes analyzing current contracts, understanding payment and credit terms, and evaluating the effectiveness of their current contract. As businesses grow, their contracts tend to shift as well.

Beyond these strategies, there are many ways to consume energy more efficiently. Having less money flowing into energy costs means that volatility in the market will feel less impactful overall. Here are some tips to reduce energy costs, especially at expense peak-demand times:

4. Invest in energy-efficient technologies

Upgrade to energy-efficient technologies, such as LED lighting, high-end insulation, and energy-efficient HVAC systems. These improvements reduce overall energy consumption and contribute to long-term cost savings.

5. Diversify energy sources

Diversification of energy sources, including a mix of renewable sources, can create a more resilient energy portfolio. This flexibility allows businesses to adapt when one source fails to provide consistent prices.


Overall, energy market volatility is an inherent challenge for businesses, but you can smooth out the turbulence with strategic planning and proactive measures. Transitioning to sustainable energy sources, leveraging the expertise of energy consultants, and implementing effective strategies for mitigating volatility empower businesses to thrive in uncertainty.

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