In my Vlog nr. 14 of May 14 I talked about the importance of reducing costs as compared to increasing revenue. I showed that if you have a profit margin in your enterprise of 5%, then reducing costs by 1000 units per month is the same as increasing revenue by 20’000 per month, simply because 5% = 1/20. So, not saving on costs can be like drying the floor with water running from an open tap. That is why the idea that I show now is as exciting as any other way to reduce costs. It is about paying less for the electrical energy that you consume.
You know that Energy is a commodity like any other, in the sense that it will cost less on the marketplace if there is more than asked for. More than vegetables, electrical energy must be consumed on the moment it is produced. Vegetables can be stored for a couple of days. Electrical energy storage is too expensive to be used much. In today's market, practically all electrical energy is consumed exactly on the moment it is produced. That is why the producer must adapt its production every moment exactly to the demand. That is already difficult without variable energy sources like solar and wind energy. Now, with Renewable Energy, this is becoming more difficult.
You see that in the image image of J.W. Zwang of Stratergy on the left side. There you see that on the spot markets on May 9, the price on in the Netherlands was far in the negative for many hours and swept then to a positive extreme value.
Therefore, there are new business models and technologies, which allow a better and automatic communication between single energy consumers and the producers. Both developments contributed in the last few decades to find ways where even retail users with over 100 MWh/year, like for example your medium size enterprise can have access to the marketplace, where the prices are really following the demand and supply. That is very different from the price structure that is known medium and large enterprises altogether and which follow a block type tariff structure, which are based for example only on one low night tariff and one higher day tariff. These “real” market prices go up and down, from one extreme to the other as you see on the left. In the summer it might be even worse then in May!
Please consider that these prices are on the wholesale market of the energy itself. On top of those you have to pay the transport and other costs. So it will be difficult to enjoy negative prices and be paid to consume energy. Anyway the idea of my advice is to access to this market and in one way or another consume more energy during (extremely) low prices and avoid the high prices.
Even as an enterprise with a fixed production and consumption scheme, there are many ways to adapt in some way to the times of the market. I told many times about this. If you ask yourself why you should engaged into this new adventure, I will answer that you have to reduce costs. See above, where I explained that saving can be 20x more interesting than producing your goods or services.
2. Financial metrics
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Thumbnail of fixed & dynamic tariffs
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Thumbnail of consumption graph
Thumbnail of resulting costs
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3. When you are in a hurry, better keep it simple!
In the previous newsletter of 22 March you read about the webinar for the Indian government. One of the Best Available Technologies (BAT) explained there was about the retrofit of ventilation systems: from belt driven to directly driven fans. In the PDF file next to this text you will find the slides that are explained here.
4. Practical and Compact course on Energy Management with inspiration
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