How can you benefit from wholesale energy?
With retail energy prices set to increase by 25% the dynamics of wholesale energy rates can empower consumers to make informed decisions and potentially reduce their energy expenses. In this post, we will explore what wholesale energy rates are, how they fluctuate during peak times, and how you can benefit from accessing the wholesale market to optimise your energy costs.
What are Wholesale Energy Rates?
Wholesale energy rates refer to the cost at which energy is bought and sold in large quantities on the wholesale market. Energy companies purchase electricity and gas from generators and suppliers at these rates, and then resell them to you with an added margin to cover their operational costs and make a profit. These rates vary depending on several factors, including demand, supply, weather conditions, and the presence of renewable energy sources in the grid.
Benefiting from Wholesale Energy Prices:
Accessing wholesale energy prices can be advantageous for individuals to reduce their energy costs. Consumers who primarily use their energy consumption in off-peak periods utilise energy when wholesale rates are lower and capitalise on potential savings. Using off-peak energy allows you to take advantage of periods when demand is lower, and wholesale prices are more competitive. Examples include those households that have people home during the day or can shift usage to schedule energy-intensive tasks, such as running appliances or charging electric vehicles, during off-peak hours.
Why does Wholesale Energy Fluctuate during Peak Times?
During peak times, typically early morning and early evening, wholesale energy rates tend to increase. This slight increase in rates is primarily driven by the increased demand on the energy grid as people rely more on cooking appliances, heating, and cooling systems. Energy companies need to meet this heightened demand, leading to a higher cost of procuring energy from the wholesale market. Consequently, these increased costs are passed on to consumers through fixed retail energy prices. However, consumers with direct access to wholesale prices are empowered to shift more of their energy use away from higher cost peak times and offset peak use with low wholesale rates at non-peak times – such as during the middle of the day.
Renewables and Wholesale Energy Prices:
An interesting trend is the relationship between the amount of renewable energy in the grid and the cost of power in the wholesale energy market. Renewable energy like sun and wind power costs much less to produce than fossil-fuel energy, making the electricity generated from it much more affordable. For this reason, when the grid has a higher proportion of renewable energy generation, such as solar or wind power, the supply of cheap electricity increases, resulting in lower wholesale rates.
Amber’s Wholesale Market Access:
Amber is an innovative energy retailer that empowers consumers to access wholesale energy prices directly. By utilising smart technology and real-time data, Amber enables you to benefit from the fluctuating wholesale rates and optimise your energy usage accordingly. You can monitor energy prices, shift your consumption to cheaper periods, and make informed decisions to lower your energy costs. This model puts the power back into your hands, allowing you to take advantage of the wholesale market’s potential savings.