Businesses in the UK are preparing for a rise in energy expenses as third-party charges (TPCs) reach an all-time high this year, as showed by a recent study made by Drax.
TPCs are a significant issue for businesses because they now account for about 40% of their overall energy costs. Several underlying fees, such as the Renewables Obligation (RO), Balancing Services Use of Systems (BSUoS), and Distribution Use of Systems (DUoS), which are all expected to rise in the coming year, have been blamed for this increase in TPCs.
Companies trying to manage their budgets against rising energy expenses face a substantial difficulty as a result of this charges’ increase in response to inflation and market volatility.
In fact, the National Grid Electricity System Operator (NGESO) anticipates that overall expenses for the 2022–2023 year will rise to £4.7 billion from £3.5 billion in the prior year. With the operator paying prices of £3,000/MWh and higher for some Half-Hour periods, the hike in market pricing and narrower system margins have dramatically increased NGESO’s balancing activities.
Additionally, according to Drax, the pricing will end the 2022-2023 period at £9.75/MWh as opposed to £ 7.01/MWh last year. With the Capacity Market (CM) auctions taking place in February, the energy sector experienced some noteworthy events, showing the price more than doubling the previous records per kW.
«Just like wholesale energy prices, TPCs are sensitive to what’s happening in the market and can rise and fall considerably each year – commented Drax’s Sales Director Paul Miller – Our “Spring 2023 Third Party Cost Guide” found that many of the underlying charges such as RO, BSUoS, and DUoS are all going to rise this year, largely due to inflation and increased volatility within the market».