Though the end result may be the glow of a light bulb or the click of the kettle, the journey energy takes to reach homes is a long one that involves many people in a myriad of roles around the world. This means that the price of wholesale energy - the energy that people buy to supply their homes - is prone to fluctuation.
While SO Energy and most energy suppliers will pass any savings on to the customers, and absorb rises in wholesale costs, in order to keep things affordable for them, there are times where customers will see an increase in what they’re paying.
This is generally unavoidable, and as an energy supplier it is not something that SO Energy like having to do. Rest assured, however, that if the energy prices are going up, they’re going up across the board.
Rise in wholesale energy prices and electricity tariffs
It’s worth mentioning that users can lock in the prices that they pay, regardless of fluctuations
In the interests of total transparency, SO Energy has put together this article to explain how wholesale energy prices can and is going up currently, and why the prices of electricity tariffs are going up with them.
It’s worth mentioning that users can lock in the prices that they pay, regardless of fluctuations in the wholesale market for 12-24 months, by signing up to one of SO Energy’s fixed rate tariffs.
Again, in the interests of transparency, this can cost users more or less in some months, depending on whether the costs go up or down, however, it will be consistent and come with peace of mind and no surprises.
- Why is the cost of wholesale energy rising?
The complex nature of storing and supplying energy means that there are a number of factors at play, when it comes to how much energy costs. A change in any of these factors - for example a shortage of gas or an unexpected disruption in supply - can impact how much energy suppliers, and in turn customers, pay for their energy.
Factors behind the high cost of wholesale energy
Currently, the factors causing the cost of wholesale energy to increase are (this isn’t an exhaustive list, but some of the bigger drivers):
- An increase in demand as the country recovers from the effects of COVID-19 lockdowns. Businesses are opening again, public transport is back to full capacity, and people are back in the office and so on, and so forth as vestiges of normality continue to return. All of this requires energy, and this has created a spike in demand that requires supply.
- A cold spring in Europe. As everyone must have undoubtedly noticed, spring this year didn’t trouble the mercury. Lower temperatures and less sunshine than expected - among other things - meant higher demands on stored energy, leaving less in storage to deal with the spike in demand outlined above, thus leading to higher prices.
- It’s been hotter elsewhere. While people experienced cooler temperatures in Europe, Asia experienced a hotter-than-usual summer. This, in turn, has resulted in higher demand for gas and electricity for cooling systems which, in turn, has also contributed to lower levels of available stored energy.
Suppliers in the UK pay one price for wholesale energy, whether it’s renewable or not
Some might wonder why the above might affect a supplier of renewable electricity; surely more wind and sunshine is all that is needed? Not quite. Suppliers in the UK pay one price for wholesale energy, whether it’s renewable or not.
Prices of domestic energy tariffs increased
On average, wholesale prices make up around 40% of what users pay, with the operations, system maintenance and regulatory costs accounting for the rest.
Over the past 12 months, energy suppliers have seen a more than 3x increase in the cost of wholesale energy. As a consequence, the prices of domestic energy tariffs that are offered have also, unfortunately, had to go up.
For those who are having a hard time keeping up with their energy bills for any reason, get in touch with SO Energy and they can discuss key ways in which they can help. Please visit their help center for more details.
SO Energy – ESB Energy merger
Residents can be very confident that SO Energy will be continuing to supply their property and provide their great service.
SO Energy has been one of the major energy suppliers since they started in 2015
SO Energy has been one of the major energy suppliers since they started in 2015 and have recently announced their merger with ESB Energy, which allows them to benefit greatly from their 90-years of experience in energy, as well as their strong financial standing.
ESB is part of Ireland’s largest energy company, with a long track record in the energy sector, and is a strong, diversified vertically integrated utility with operations spanning electricity generation, transmission and distribution and energy supply.
Big investments in UK green energy infrastructure
Over the past three decades, ESB have invested over £2 billion in UK green energy infrastructure, and their renowned history has been supported by an extremely strong financial foundation, so users can be sure that they will be here for them and continue to provide their excellent service.