Cutting-edge advice on energy markets

Energy markets

Energy markets sustain our economies and our daily lives. Every company and every household needs energy. Energy markets are regulated in many parts of the world. Energy suppliers enjoy a monopoly and tariffs are set by the government. However, there is a strong drive towards liberalization. In an open energy market, the laws of supply and demand determine the price of energy. Understanding how they work is necessary if you want to be a successful energy buyer and become an “energy entrepreneur”.

Deregulation isn’t the only transformative force changing the energy markets landscape. The current renewable energy revolution is reshaping the entire industry. At the same time, new production techniques such as fracking have made more natural gas and oil available to the markets. On top of this, growth of LNG and its exportation abroad on tankers in the form of super-cooled natural gas is globalizing the gas markets. Do you have a solid understanding of how these changes affect your business?

You can read several articles a day on energy in the newspapers and specialized press. But as a busy professional, you don’t have time to read them all. And even if you do, you need someone to exchange ideas and opinions with and help you digest all that information. Moreover, it is difficult to find an unbiased perspective when dealing with commodities that drives costs for businesses and consumers alike. Are you confident that the market information you received is both objective and responsive to your interests and concerns as an energy consumer?

Global energy markets

Analyzing global energy markets is crucial to understanding the fluctuation of local energy prices. Most market observers are used to looking at the Middle-East, Venezuela or China to understand what’s driving the price of oil. But the analysis of natural gas or electricity markets often lacks this global perspective. The increase in LNG trading has caused gas prices to converge. If you want to know what is driving your gas price, you’ll have to look beyond your local market.

Due to a lack of interconnection and the absence of shared energy generation across borders, electricity markets are more local in nature. Nevertheless, as the pricing is largely driven by combustibles that are traded around the world, a global perspective can provide deeper insight into supply and demand fundamentals. Moreover, looking at a phenomenon like the renewable energy revolution from a global perspective can shed light on important developments in your country.

More and more countries are deregulating their energy markets. Drawing lessons from countries that have already gone through the process can help you make the right decisions in this transition phase.

European energy markets

European energy markets are driven by strong transformative processes:

  • The liberalization of natural gas and electricity markets, which has led to the commoditization of these products,

  • The renewable energy revolution, which has resulted in decentralized, market-oriented power production.

  • Climate policy, in the broad sense that it impacts energy consumption patterns.

  • The rising dependence on imports of increasingly global fuels such as natural gas and coal.

As European electricity and natural gas are often traded on exchanges, there is a lot of pricing information available. But is your understanding of the ins and outs of European energy markets guided by a strong, unbiased analysis? And are you sufficiently aware of the increasingly important non-commodity elements such as regulated grid fees and taxes?

US energy markets

Over the course of the past few years, the shale gas revolution has driven US energy markets to historical lows. Within this broader, bearish trend, volatility remains high. The month ahead Henry Hub wholesale natural gas price was almost three times as high in March 2014 compared to March 2016.

However, if you are buying energy in the US, you have to look beyond the Henry Hub pricing. What you pay for your gas is also determined by basis pricing, or the cost of transporting gas via pipelines to your location. If you are in a deregulated state, you can decide whether to leave the Henry Hub and/or basis pricing open for spot pricing, or fix it up-front. US electricity markets are also very local in nature. In states with electricity deregulation, you can find a wide variety of spot prices and forward markets that you can use to fix pricing.

Buying energy in the US energy markets in a successful manner requires first and foremost that you gain insight into the wholesale markets that are driving your pricing and start monitoring these price levels. Broad trends such as the increase in natural gas production, the crackdown or support of coal-fired power plants, and the growth renewables in States like Texas, Massachusetts or California all influence your pricing. At the same time, local phenomena such as pipeline or powerline congestion determine what price you pay. Are you aware of these market factors? Are you monitoring your price drivers? Or are you just taking prices as they pass you by?

E&C’s energy markets analysis

Across the globe, whole armies of ambitious analysts and journalists are tracking the energy markets’ every move. They produce a massive amount of information which spreads around the world in a matter of seconds. What you read in the popular press is often overly simplistic, outdated and too focused on geopolitics. On the other hand, the specialized press often bogs itself down in details and misses the broader picture. Its analysis is also usually directed at the energy industry rather than end consumers, causing a lack of focus or even bias. A sound analysis of the global supply and demand trends that really drive pricing is often missing. E&C is filling that gap through its market intelligence.

E&C’s intelligence on energy markets is different from what you can find elsewhere because:

  • It is unbiased. At E&C, we are truly convinced that energy markets are unpredictable. We don’t select facts based on whether or not they fit the bearish or bullish view that we have on the market. This allows us to give you real insight in the continuously changing factors that affect supply and demand.

  • It’s brought to you from an energy buyer’s perspective. We are independent - we only work for energy buyers like you, and our views on the market are generated by our consultants. They offer advice to energy buyers on daily basis, echoing the very same contracting and price management concerns that you have. Our energy market analyses always answer the fundamental question: “what does it mean in terms of buying energy”.

  • It is truly global. We service clients all over the globe. Our consultants work together in one team, sharing their experiences in their specific markets with each other. This allows us to give you insight into global energy market trends.

We bring you this information through:

  • Our daily and monthly market analysis. These are newsletters that provide all key pricing information as well as an overarching written analysis.

  • Pricing information on your ePoint site.

  • Blog articles, videos and podcasts which comment on important trends in the markets and in energy buying.

  • The market presentations your consultant will use during meetings and conference calls.

  • Our various events, including webinars and energy conferences.

As a busy procurement professional you might not have time to browse through all relevant energy articles and find the relevant information. E&C selects and curates this information for you. As an energy market specialist that is extremely well-read, E&C is your ideal sparring partner for talking about what really matters in terms of price development.

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