MA Leaders Club

‘Energy prices starting to come down but market is a mess’

By Nikkie Thatcher

- Last updated on GMT

Expert opinion: Simon Treanor (left) and Andy Fannon (centre) discuss the energy market with The MA’s Ed Bedington (right)
Expert opinion: Simon Treanor (left) and Andy Fannon (centre) discuss the energy market with The MA’s Ed Bedington (right)

Related tags Multi-site pub operators Finance Birmingham

While utility costs are still high, they are beginning to reduce, one energy expert has suggested.

Delegates at The Morning Advertiser​’s MA Leaders Club event heard from experts about the energy landscape and were advised on areas of their businesses where savings could be made.

Andy Fannon from energy consultancy UB Services UK outlined the current state of the market to the audience in Birmingham earlier this month (Thursday 2 March).

He said: “Obviously, everybody knows what a mess the market [has been] in the past 18 months. We’ve steadied the ship slightly over the past six months, prices are beginning to come down but the actual market itself is a mess. Hospitality sees particularly the brunt of the energy market.

“Everything is preying on the pubs and the clubs and everything is against us in this moment in time. We've got suppliers that won't supply hospitality at all, even if they do, the charges and standing charges are huge.

“We have people who are signed into three-year deals at unbelievable rates and they are stuck. We are talking thousands a month and it's unreasonable. It won't work. Pubs, clubs will go to the wall. Something has got to give but there's nothing showing at this moment in time.”

He went on to say the deals available currently were better than six months ago but there was still room for improvement.

Fannon advised delegates on best practice with suppliers when expanding and going into a new venue.

“If you take over a new site, you must ensure you inform the supplier you are there, ensure there is proof you have taken over,” he said.

“It could take six months before you have a contract or before the existing supplier even recognises you're even there. It's imperative you make some form of a mark in the sand so you know where you're up to.”

Totally unreasonable

However, Fannon believed prices won’t drop much further than they are at currently.

He said: “There's nothing in the near future to say prices are going to reduce much more from what they are, I don't think we will go back to pre-Christmas where prices were totally unreasonable but the days of 1p and 2p a unit of gas have gone.

Technik-2 is a technology company that specialists in helping venues such as pubs reduce their energy consumption and carbon emissions.

Owner and director Simon Treanor gave his view on the situation and called for unity in holding suppliers to account.

He said: "The energy providers are being completely cynical towards our sector and the more voice that can go to identifying what they are actually doing the better.

“But the reality is we are where we are and there are some really interesting slides that were shared with me.”

He referenced research from a number of wet-led pubs that analysed where electricity could be saved.

“They looked at those pubs averaging just over £40,000 a year for electricity and I believe they were costing this at about 39p so where the Government cap is coming down to for the sector.

“The best opportunities installing solutions or potentially around behaviours.

“They then identified the best areas [for the solutions]. Firstly in the cellar, where there's about £18,000 of energy consumption being used, potentially heating systems and then the bar itself.”

Solution potential

The business had managed to put in solutions for operators to reduce energy usage and Treanor highlighted how.

“From our point of view at Technik-2, have been involved in the industry for about eight years. We identified the cellar was the low hanging fruit where some savings could be made,” he added.

“The approach Technik-2 always took in terms of developing any piece of energy saving equipment was very simply the mantra that it had to pay back in a year.

“If we couldn't generate savings in a year, then we would redesign what we produce. Those 10/11p per kilowatt hour rates, we were generating returns within a year for some people.

“The returns are phenomenal. If you consider a pub is probably from the point of view of the cellar cooling system, the beer and cider. The post-mix and the back bar fridges, which are areas where we have solutions, you're using probably on average about 40,000kw per year.”

The saving equates to thousands and Treanor explained how the systems are designed for trading periods and when the pub is closed.

He said: “That is at 30p a kw is £12,000 a year, 40p is £16,000 a year. Our pieces of equipment are all designed to be demand-led.

“We work to ensure the beer and drinks can be dispensed at the optimum cooled temperature when someone is in the pub, at night, outside of trading hours, when the pub isn't pouring pints, we come up with solutions that will save energy in those down times.”

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