Energy risk forecaster helps firms project 10-year costs

A new energy risk forecasting tool has been designed to assist business energy users in developing a long-term strategy to mitigate the risks brought on by rising costs.

SMS [Smart Metering Systems], has developed the tool which allows British businesses to forecast their potential electricity and gas costs for up to a decade in advance.

As a result of rising energy costs coming from new subsidy elements to promote sustainable generation and greater grid flexibility, SMS expects electricity costs to rise by 55 per cent between now and 2028, while gas is forecast to increase by 21 per cent over the same period.

This, it says, is why it is “essential” for British businesses to get a clearer picture of their future energy costs, and particularly how this affects the different aspects of energy risk they will face if a fully-mitigating energy strategy is not put in place.

The energy risk forecaster is free to use and works off information including energy type, tariff and latest annual consumption rate. From this information a forecast is generated.

Paul Jarvis, head of energy markets at SMS, said: “We’ve created this tool in response to the demand from energy users who need to better manage their long-term price risks. As the tool provides a complete picture, building up both non-commodity costs and wholesale price forecasts, it’s been extremely well received by our clients.

“The UK energy market will see dramatic changes over the next decade as we plan for grid decentralisation and decarbonisation in line with increasing demand from households and businesses. These factors have all been taken into consideration in our models.

“Using our forecast as a benchmark, we help energy users develop much longer-term investment, procurement and efficiency strategies to not only mitigate the risk, but to also unlock the benefits that the new market is creating for those willing to plan ahead and adapt quickly.”