Almost every business needs to invest in utilities. Electricity, gas, and water are necessary for the sustenance of any growth. Business utilities are not, however, always static in price. They fluctuate in price and availability regularly, thanks to external factors. Here are a few of the most important reasons behind the recent changes in the field of business utilities.
The deregulation of formerly regulated utility markets has arguably been the most beneficial change in the business utility field for some time. In the United Kingdom, for instance, business water provision was deregulated in 2017. This allowed businesses to find better deals because water companies were competing for their businesses. Price comparison services like Utility Bidder sprung up to help businesses navigate the newly deregulated system.
Electricity, water, and, to a lesser extent, natural gas are all utilities that are affected by climate change. If your business is not actively preparing for the effects of climate change, then you need to start planning now. Here is how water and electricity utilities are affected:
Electricity is largely generated using fossil fuels. In 2019 around 84 percent of the world’s electricity was generated using coal, gas, and oil. Coal, gas, and oil are all finite resources that emit huge quantities of carbon into the air when they are burned. Electricity prices will increase for businesses if the world does not make a very dramatic switch to renewable energy sources. Equally important is the impact of potential carbon limiting legislation by governments around the world. Electricity providers will find it more and more expensive to generate electricity using fossil fuels. Large businesses should lobby governments in order to influence more renewable energy policies. Unfortunately, many large businesses are only looking at the short-term picture and are lobbying in the opposite direction!
Water provision is severely hampered by climate change. Many countries are undergoing a water crisis, which you will have felt the brunt of if you live in California, Australia, or parts of Africa. Water prices fluctuate wildly according to local availability, so businesses need to be smart and agile when purchasing water provision plans.
Because of the wildly fluctuating price of business utilities caused by climate change and deregulation, speculation has become a feature of previously unaffected fields. Fossil fuels have long been subjected to market speculation and trading, but water has recently also been traded as a speculative investment. The Chicago Mercantile Exchange recently started allowing traders to buy and sell water futures. The concept behind this is, sadly, that water prices drop and rise so much that a smart trader can make a fortune in buying low and selling high. This will ultimately change the way in which water pricing works. It will be far more reliant upon market speculation and the self-regulation of the speculative market. If that self-regulation in other fields is anything to go by, it may lead to a water pricing crisis in the future.