20.01.2022

Why will many companies not have a chance to lower the electricity price? The reason may be the notice period of the applicable contract.

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Arkadiusz Somnicki

Member of the Board

High electricity prices have increased the interest of entrepreneurs in purchasing electricity from alternative sellers. Those who postpone the decision to purchase energy for the second half of the year may encounter an unpleasant surprise - they will not be able to take advantage of attractive price offers. Why? There are still thousands of energy purchase agreements with a multi-month notice period, often with effect at the end of the year. The consequence will be the need to purchase electricity from the current seller for the next 12 months..

This situation applies in particular to companies that have never changed their energy supplier and as a result have not changed the energy purchase agreement for many years (data of the Energy Regulatory Office indicate that from 2007 to 10.2021 only 0.2 million customers from tariff groups A , B and C changed the seller - approx. 8% of Polish enterprises). It should be borne in mind that provisions on several-month notice periods with effect at the end of the year may also be found in newly signed contracts, concluded e.g. when changing the supplier.

For example, a company with a 6-month notice period in the current energy purchase agreement with effect at the end of the year, which receives an attractive offer for 2023 from a competitive seller in July, will not be able to take advantage of it. In this case, the company will have to buy energy for 2023 from the current seller (unless it pays him a penalty for breaking the existing contract) and the price that the company will see on invoices next year will depend only on his will. The current market situation is so dynamic that the price received from the current seller and the price obtainable on the competitive market may vary by several dozen, and in extreme cases even several hundred percent. The contract for 2024 will be another opportunity to purchase energy at a favorable price.

The sellers' motivation to propose attractive prices is the greater, the more they are aware that they can be easily changed to others..

We encourage entrepreneurs to check the provisions regarding the notice period in their contracts as soon as possible. If this period is several months, the company should already contact the current electricity supplier in order to change the contractual terms. If he does not want to establish new terms, it is worth thinking about terminating the contract, which is not synonymous with the end of cooperation. Such a maneuver gives entrepreneurs the opportunity to choose a new seller for the next year. It often turns out that the current seller, leaning against the wall, submits an offer to sign a new contract, but on favorable terms.

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03.06.2024

Webinar – Discover savings: strategies to reduce energy and gas costs

Are you an entrepreneur? Are you interested in securing energy and gas prices for 2025 and subsequent years? Are you watching the situation on global markets with concern and wondering how the possible development of the geopolitical crisis may affect media prices?

Enfree Webinar - Discover Savings: Strategies to Reduce Energy and Gas Costs.

June, 6th 2024 | 11:00 - 12:00


Register today! Enfree Webinar Registration

Arkadiusz Somnicki and Adam Wlizło will present proven strategies and innovative solutions that generate real savings.

The agenda includes,among others:
💡Preparation for 2025 - contract, termination, change of seller.
💡Stock market purchase model – how is it better than a fixed price?
💡The future of energy prices: the role of photovoltaics in shaping the market.
💡Q&A session.

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Energy of the future – from energy storage to dynamic tariffs

The dynamic development of renewable energy sources (RES) opens new prospects for enterprises. In the face of challenges related to connecting new renewable energy sources to the power grid, storage technologies are becoming an increasingly important element. Hybrid installations combining renewable energy sources with energy storage are developing at a fast pace. This solution not only increases independence from traditional sources and the national system, but also increases the security of energy systems. Thanks to this, the electricity produced from renewable energy installations at the peak of production (e.g. a photovoltaic installation during sunlight hours) can be partially used for current needs, and the rest of the produced energy will go to storage. This will make the owners of such sets more energy independent, regardless of the consumption profile, provided that a sufficiently large generation and storage capacity is built. An additional environmental advantage is the ability to obtain 100% green energy for your company.

Preparing customers' electricity systems to use dynamic tariffs will be an interesting topic in 2024. Although the launch of the Central Energy Market Information System (CSIRE) will not take place in mid-2024, as originally planned, this moment is getting closer. The introduction of a fully functional system will mean that consumers who consume even little energy will have the opportunity to use dynamic tariffs, in which the price will be different for each 15-minute delivery period. The introduction of purchasing automation supported by artificial intelligence to this model will allow for better management of energy flows, prediction of failures and optimization of deliveries. Artificial intelligence will begin to play an increasingly important role in the energy sector, from process automation to advanced analyses. This is not only efficiency, but also the key to understanding market trends. As energy networks digitize, new risks will emerge: cyberattacks. Investments in advanced security systems will become key to protecting critical infrastructure. Reliability of energy supplies will be a priority, and a key aspect in the near future will be the modernization of the network to strengthen its resistance to failures and the diversification of energy sources.

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Dynamic price declines and global challenges. The electricity and natural gas market at the beginning of 2024

Current situation on the electricity market

In the first weeks of 2024, we observed declines in electricity prices on the Polish market, which is a continuation of the trend from the fourth quarter of 2023. On December 29, 2023 (the last working day of the year preceding the delivery year of 2024), the price of the annual BASE_Y_24 product was set at PLN 490/MWh. It is worth noting that the minimum energy price achieved in December last year was approximately PLN 471/MWh, which is the lowest level since November 24, 2021.
In the case of other products on the futures market (quarterly, monthly and annual with delivery in subsequent years), we also recorded price declines. Futures contracts currently available for purchase for delivery in 2024 include those for the second, third and fourth quarters, as well as all monthly (except January) and seasonal and weekly contracts. The table below presents a comparison of exchange prices on January 17, 2024 to prices quoted on December 29, 2023 on the Polish Power Exchange (TGE) for the main futures products and SPOT prices (Day Ahead Market) in the TGe24 index.

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