Inflation Set for Double-Digit Surge as Energy Costs Hit All-Time High

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It’s not so much “Now is the Winter of our Discontent” but rather it soon will be. With both diesel and petrol prices forecast to hit Euro 2 per litre in the coming days, it now looks more than likely that the much mooted “fuel rationing” will indeed become a reality of Winter ’22.


Against a backdrop of hushed panic across Leinster House, civil service mandarins and government members are hastily trying to secure additional and/or new energy sources ahead of a looming supply crisis.

With the Energy Supply Emergency Group having regular weekly meetings, plans are well underway to reinforce energy supplies for essential and emergency services. The main losers of a season of fuel and energy rationing will, however, most likely be big business players such as global IT hubs and Data Centres, large-scale manufacturing plants, as well as businesses from within the pharma, chemical and construction sectors. Many of these high-energy consumers have already been notified that they will be allocated on/off-grid slots, with those time periods looking set to increase over time as rationing puts the squeeze on energy supplies.

The predicted blackouts and fuel rationing will not just impact on a national level. Most large-scale businesses operating in Ireland are internationally owned, leaving the IDA with some serious damage limitation exercises to perform if our reputation as a key location for high value investment is to be maintained.

While Ireland is better placed than many of its mainland EU counterparts – we source the majority of our gas from the UK – we are still vulnerable to market fluctuations and the knock on from Putin’s war on Ukraine.

Not since the 70s/80s has Ireland experienced planned energy outages and even then those blackouts were limited to a set number of hours per area across short periods of days. Mandatory energy outages arising as a result of global fuel shortages are a cross Ireland has not had to bear since the days of the Opec Oil crisis of 1973/74. The days of mile-long queues at the petrol pumps had all but been forgotten and the stock of white candles relegated to the back of kitchen cupboards.

It’s not all doom and gloom, as gas users look set to avoid any impact other than financial. Gas connectivity is too technically complex to allow for disruption to supply. So, it looks like electricity users will bear the brunt of the upcoming energy outage.

According to Minister for the Environment and Transport Eamonn Ryan, the grid should be able to maintain uninterrupted supply until at least the end of November. However, the risk to energy security is more real now than ever before and large businesses are already investing in additional generators to guarantee continuity of operations. It is predicted that outages will start at corporate level, with business being told to come off grid for so many hours per day.

However, if the situation worsens, as seems likely, this programme for outages will move to domestic level, with homes being disconnected at certain times weekly, potentially on a daily basis.

Added to the threat of power blackouts is the ongoing inflation of energy prices. Energy costs are now spiralling out of control with yet another major player in the electricity supply market announcing its fourth increase this year with a 35% rise in electricity charges and a 40% increase in its gas prices. Worse still, it looks like there is no end in sight, with the rest of the energy market looking set to follow suit.

 

Electricity costs are already running on a 40% uplift from last year, so any further increases by the other energy supply companies will most likely seem prices inflate by over 50% year-on-year.

 

It is expected that domestic energy bills will hit somewhere around Euro 4,000 for the year into 2023. Meanwhile the energy supply companies are publishing multi-billion dollar profits in the last quarter alone, while one CEO of a big player in Ireland, has had his salary increase by 47% to Euro 5 million.

 With domestic consumers looking set to face an average 50% increase in home heating bills, corporate users will face an even greater financial hit with the dual burden of fuel and energy increases impacting everything from transport and refrigeration to lighting, heating and production costs.

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Never has been more crucial for organisations to introduce a new or enhance an existing energy management strategy and system. Why? Because adopting the tried and tested rigorous requirements of the ISO 50001 Energy Management Standard will ensure any business will quickly realise reduced costs, optimal energy performance and streamlined service operations.

At a time of spiralling costs – not just energy but across the board – it is vitally important that businesses take the management of energy into their own hands. By controlling usage – time, who, why, how – minimising waste, reducing costs and overheads to the minimum and standardising processes and requirements, businesses can achieve significant savings in costs, labour and time.

The winter of discontent may be looming, but by taking steps to minimise rise and impact, there might just be a little silver lining to all those incoming dark clouds.

For more details on ISO 50001 Energy Management System Standard to our dedicated web page https://www.cgbusinessconsulting.com/standards/iso-50001/ or contact a member of our consulting team to have an informal chat about the benefits of this and other relevant ISO Standards.

David Whelan, Logistics / QEHS Manager Grundfos Ireland "We found the level of competency from the team to be of a very high level compared with other consultants. CGBC worked to get a very thorough understanding of our business, this made life easier for us and meant they could give us some very helpful advice."