The news of falling energy prices is bringing a sigh of relief to the Netherlands. Could the end of the energy crisis be in sight? But if you zoom in on the situation, you will see that we are not out of trouble yet. Time for a sustainable strategy!

In recent weeks, many large companies presented their 2022 annual figures. One thing is striking: energy bills take a big bite out of profits. Sky-high energy costs were also the reason why other companies were forced to close in 2022. Meanwhile, people seem to be able to see the light at the end of the tunnel. In early 2023, there were even optimistic news reports about falling energy prices. However, organizations that think the energy crisis is over will be disappointed. In fact, according to experts, a repeat of the massive price increase we saw in 2022 is very possible in the coming years. How does that happen?

War in Ukraine continues

A major uncertainty is the duration of the war in Ukraine. At the moment it doesn’t look optimistic. According to Foreign Affairs Minister Hoekstra, the battle could last for years. Europe also continues to suffer greatly from this. At the moment, Europe is still too dependent on Russian gas. The European Union has announced that it wants to be completely off Russian gas by 2027. We are therefore dependent on the import of LNG (liquefied natural gas) by ship from other countries, the price level of which is much higher. Since gas is still needed to generate electricity, the higher gas price has a huge impact on electricity prices.

Groningen closed

Since 2018, gas extraction from the Groningen field has been phased out as quickly as possible. Since April 1, 2023, more than half of the production sites in Groningen have been closed, and the remaining sites are on standby. This means that a very minimal amount of gas is extracted, which is only available in extreme emergencies. The aim is to permanently close the Groningerveld in October 2023, or at the latest in 2024.

Possible increase in LNG demand

After a period of strict measures due to corona, the Chinese economy has reopened. China is also a major buyer of LNG and the reopening may increase demand for LNG from China. This could in turn lead to increasing competition between Europe and Asia over an already scarce supply.

Dependence on Norwegian gas

In addition to importing LNG by ship, Europe also imports a lot of gas from Norway. Norway has even become the most important gas supplier for many European countries. This gas is transported from Norway to the rest of Europe via an underground network of pipelines. However, the Nord Stream pipelines, which previously exported gas from Russia to Europe, were sabotaged last autumn. There are fears that such sabotage could also occur on Norwegian pipelines. Even a well-stocked European gas supply may not be enough if Norwegian gas imports collapse.

Uncertain times

All in all, there is a lot of uncertainty regarding the demand and supply of gas in Europe. This leads to price fluctuations. If there is more demand than supply, prices will rise. Extremely high gas prices require an increase in supply and a decrease in demand. The gas price is also an important element in the balance between supply and demand in the energy market, but the balance between supply and demand in turn also largely determines gas prices.

The best tips for saving

The government offers a number of financial support schemes and subsidies to encourage sustainability. Of course, it is important to make use of this as well and as much as possible. In addition, as an organization you must take action yourself. Make your home more sustainable where possible, for example, by purchasing solar panels and purchasing your energy strategically. By continuously monitoring energy consumption and developing a good energy strategy, you will discover many savings opportunities. This provides clarity, stability and certainty in these uncertain times, which will continue for some time to come.

When should you strike in the energy market?

Energy prices change daily. This makes choosing the right purchasing time difficult. Due to the uncertainty, many organizations are losing their grip on the situation, and panic is starting to set in. Focusing on the short term causes uncertainty, while a long-term investment with the wrong timing can be fatal. When should energy be purchased and what type of contract should you conclude? It is advisable to remain calm in this regard and wait for opportunities. Would you rather not be alone in this? An external energy expert regularly checks (price) developments, keeps a cool head and makes the right decisions.

Need help setting up an energy policy?

At PowerQ we know that energy can be a complex topic for many organizations. Moreover, developing an energy strategy isn’t something you can just teach anyone; just think of the expertise required to time purchasing decisions. That is precisely why we offer a Chief Energy Officer ‘as a service’. A Chief Energy Officer is a jack-of-all-trades who knows everything about setting up a sustainable energy policy. This will help your organization develop a suitable, sustainable energy strategy, and there will still be light at the end of the tunnel this year!

Learn more

It’s nice to see that you are interested in energy price developments. Over the years we have achieved excellent results for our clients. I would be happy to tell you more about the possibilities of a purchasing strategy that suits your organization. Please contact me for this.