The UK energy market ‘crisis’

Anyone reading the news today in the UK will have seen the extensive headlines and reporting on mounting fears for the country’s energy market, with FTSE stocks falling and companies struggling.

With gas prices up 70% in a little over a month, some energy providers face bankruptcy and there is even talk of a multi-billion-pound taxpayer bail-out. Some experts predict spiralling bills for household energy and food supplies, with one going as far to say we could be facing a three-day working week this winter.

Headlines can often exaggerate a situation, and even used to scaremonger, but as someone who has been in the energy sector for over 20 years, I believe the supply side of the country’s energy market is facing a once-in-a-generation challenge.

An untimely combination of market forces, the unpredictable global reawakening post-pandemic and the resulting impact on demand, overlaid with ongoing political and geo-political interplay, is leaving UK energy suppliers hamstrung and UK consumers facing the very real possibility of footing the bill.

This weekend I sat down to read the Sunday papers taking in the suggestions which included Whitehall-backed loans for energy firms. Is that a solution? Does a loan solve the problem of a tariff being lower than the cost of sale, or does it just kick the can down the road in some blind hope the market forces turn in the suppliers favour?

How would struggling firms pay those loans back in reality?

Another narrative over the weekend was about the removal of green levies to increase the liquidity positions of energy firms, or the role of a ‘new co’ to take on stranded customers, only to sell on in the future. Quite simply, what we’re hearing, and seeing, is alarming.

Having lived and breathed the energy sector for many years, I know only too well what it’s like to run an energy company and battle against ever decreasing margins in what has long been a low-margin environment. To witness what it’s like for an energy company to shut the doors for the last time is heart-breaking.

Today, we must urge everyone to rally round and support this crisis without looking to blame or point fingers. The focus now must be the future, on short, medium and long-term solutions leading to the recovery of an embattled industry.

Rather than relying on overused rhetoric, we should spare a thought for those people who have lost jobs – those very talented industry experts who have tried, or are trying, their level best but market forces are just too strong.

No one is trying to do a bad job, competition is there to bring lower prices and better levels of services, but when you are caught in the middle of a perfect storm, your boat just might not be strong enough to cope in the heavy headwinds and we have to come together to find a way forward.

It would be refreshing to see the Government and the industry regulator take control of this situation once and for all, to grasp it, to take the sting out of the media feeding frenzy, and to come up with sustainable solutions. There are fixes for today and there are fixes for the next five, 10 and 20 years. A loan scheme isn’t what the industry needs right now. What is does need is a circling of the waggons that culminates in a long-term strategy to support and fix, not to watch, an industry fail.