Where Does Energy Risk Management Add Value?

Improving margins and consequently company valuation can be achieved through the increase of sales or the reduction of operating costs. Alfa Energy has no influence on the former element, but we specialise in the latter.

Improving your margin

Say your cost structure shows that 10% of the overall cost budget is spent on energy: gas and power. Envisage you lower these costs by 10%. Your saving on the overall operating costs is then 1%, from 10% down to 9% of the cost total. This improvement flows down directly to the bottom line. So if your margin was 3%, it is now 4%– an increase of 33%. You have hence just improved your margin through mitigating the energy costs.


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Triads – What Are They and How Do They Work?

I wanted to address Triads in this post, and before you ask, no, I am not referring to the transnational organised crime organisation from Hong Kong. I am referring to the Triad charge or Transmission Network Use of System (TNUoS) charge, which is used for maintenance of the UK electricity grid to ensure future supply.

Thus, the Triads in the spotlight here are the three half-hourly settlement periods with the highest demand, or peak demand if you will, on the system between November and February. These three periods have to have ten clear days between them. You may be asking yourself, why the ten days? Quite simply, it is so that a long extreme cold snap does not dictate all three Triad periods.

It was mentioned that these charges are used to ensure future electricity supply, so the National Grid is trying to reduce these peaks. Why? It is a lot easier to plan demand if it remains steady. The National Grid is in charge of identifying the three highest peaks in the electricity demand and publishing that data every March/April. It then charges suppliers a higher tariff for electricity during Triad periods, ensuring that they recover the necessary revenue for running the UK transmission network.


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Should You Go SMART and Never Look Back?

We have all heard of the government programme to put a SMART meter in every home and business by 2020, which is a way that the Government plans to bring our energy systems up to date. Basically, energy suppliers (both gas and electricity) are required to install smart meters in every home and business in the UK. The plan is for the programme to take off from 2016-2020 and for it to be managed by the Department of Energy and Climate Change. It is, however, not mandatory for homes and businesses, and you may opt out of the SMART meter installation.

But, what exactly are SMART meters? What is the difference between an AMR meter and an AMI meter? How does it all work, and what benefits will you see as a business? There are still a lot of unanswered questions out there in regards to a SMART grid and SMART meters.

At present, most homes and companies in the UK do not know how much energy they are consuming and what exactly it is costing them. Understanding the consumption patterns will allow both the business and the grid to plan their activities better and work towards reducing losses, thus contributing towards energy savings schemes.


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Power Factor (pF) – What is It?

The pF is usually defined as the ratio of the real power flowing to the load to the apparent power in an AC electrical circuit, or you could say that pF is the cosine of the phase angle between current and source voltage.

To put that a little simpler: pF represents the fraction of total power (apparent power) which is utilised to do the useful work called active power. It provides a measure of how efficiently a load current is being converted into useful work output. Essentially, this is an indication of the overall efficiency of a supply system.


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Demystifying Your Electricity Bills

How many times have you looked into your monthly electricity bill in detail? Have you ever wondered what the amounts represent exactly? Do you understand them all?

As a business consumer, you probably don’t have the time to look into details, but you would probably still like to know where your money goes along with the best way to optimise your consumption and potentially make some savings.

Hopefully by the end of this article you will have more insight into what you are charged for, and you will have a better understanding of your monthly payments.


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Insights Into Flexible Procurement

The primary aim of flexible procurement is not to beat the market. It is, however, a tool to procure your energy smartly and to mitigate the risks associated with market fluctuations. In other words, it is a way of managing the price risk.

Flexible procurement used to be an approach only accessible to large users. The shift in the industry now accommodates users with consumption down to 2 GWh. Still, the larger the consumption, the more flexible products available. In clients’ mindsets, this was perceived to be a risky strategy and still is. Yet, what is riskier: taking just one bet or taking a series of bets on the price to average the outcome? History and experience show that the latter usually gives better results.


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