The Impact of Cold Weather on Energy Prices

by | Aug 31, 2018

With winter on the way, what is the impact of cold weather on energy prices? Are we in for another cold winter, and another ensuing spike in energy prices?

Britons will have not-so-fond memories of this year’s ‘Beast from the East’ – freezing temperatures, gridlocked traffic, empty restaurants and shops and idle construction equipment.

Wholesale gas prices spiked to the highest level in two decades (300p) due to a deficit in supply, as the UK competed with Europe for gas supplies.

So, are we in for another cold and expensive winter?

2018 winter weather predictions UK

After a warmer-than-usual summer for much of the UK, mild air conditions are expected to continue into autumn.

According to AccuWeather Meteorologist Tyler Roys, the average temperature for September and October will be about 1-2 C higher than normal. But by November, more traditional stormy patterns are expected to settle in.

More extreme weather on the way?
Some experts predict that El Nino will bring further months of extreme heat and cold in the UK, and could trigger another very cold winter this year.

The impact of cold weather on energy prices

The weather drives up the amount of energy we need, as well as how much we pay for it. In fact, when UK electricity demand reaches its peak, it’s estimated that demand rises by 820 Mega Watts (MW) for every degree the temperature drops below 15 C.

Increased energy demand in winter
Energy demand in the UK is higher in winter than it is in summer. From October to March, the colder, darker weather causes the population to stay indoors more, turn on lights for longer periods of time and switch on central heating.

Setting back the clock
The end of October signifies the end of the British Summer Time, with clocks put back one hour. Because the daylight hours shorten, this traditionally provides an increase in peak demand of 6-7%.

Read our infographic on The Truth About Daylight Savings Energy Efficiency.

Reduced renewable generation
In the darker winter months, solar generation is minimal; however, wind levels are generally stronger, causing fluctuations in the UK’s available renewable energy supply. This intermittent generation means that the country isn’t able to rely on renewables during times of demand stress.

Electricity power plants work better
Power plants work better in winter’s cold weather:

  • Cooling towers work more efficiently
  • Power cables are more conductive
  • Less energy is needed to help keep equipment from overheating.

These factors mean small cost savings in electricity generation.

… but gas demand increases
During winter, the UK uses more gas, largely due to the rise in heating. This increased demand raises the gas price and has a knock-on effect on electricity costs.

Storms and extreme weather
Rain, snow, storms and other extreme weather conditions can also impact energy generation and supply during winter. These conditions can cause damage to energy infrastructure such distribution centres and power lines, leading to high repair costs and could lead to higher winter energy pricing as a result.

Generally speaking, gas and prices are expected to rise during the winter months.

How to reduce the impact of cold weather on energy prices

Before the winter hits, it’s advisable to shop the market, compare quotes and move onto cheaper energy tariffs. Choosing a fixed tariff will also mean that your energy prices won’t fluctuate throughout the contract period.

Smarter Business’ energy experts will help your business secure the best energy tariff to help you reduce your winter energy bills.

Once you’re on a cheaper energy tariff, the next step in reducing the impact of cold weather on energy prices is to look and reducing your business’ energy consumption. We’ve written some helpful guides and blog articles with energy-saving tips:

Bureau Services & Business Energy Savings | Smarter Business

Ensure Accurate Utility Billing and Cost Recovery With Bureau Services   Energy market volatility and net zero pressures make airtight business energy management a must for modern businesses. Engaging energy experts for bureau services is an integral strategic step to...

2024 Energy Market Volatility Strategy | Smarter Business

2024’s Forecasted Energy Price Increases and the Best Way To Save  Energy Market Volatility: Take The Power Back   Wholesale energy market volatility has seen an increase in prices, with projections showing fluctuations for the remainder of the year. With anticipated...

MOP DC/DA For Business Electricity | Smarter Business

Energy Spotlight: MOP DC/DA Contracts  What Are MOPs and DC/DA and Why Are They Important?  Effective metering and timely energy data hold extensive potential benefits for businesses. These include billing accuracy, effective energy efficiency strategies, and costs...

2024 Commercial Energy Price Forecast | Smarter Business UK

2024 Commercial Energy Price Predictions  For business owners, the question on everyone’s minds is, “Will energy prices fall in 2024?” At first glance, we appear to have started strong in 2024 – with a 12% reduction in the short-term energy price forecast according to...

2024 Business Energy, Gas, Water, Facilities Maintenance

Business Energy Tips for a Strong Start In 2024    Insights To Ensure Business Utilities Are New Year Ready  As we take our first steps into the new year, it is the perfect time to get everything in line to start 2024 on the right foot. Take the time to relook at...