Future of energy brings opportunities as well as challenges – Tesco

Fluctuating prices, questions over security of supply and concerns about emissions make the life of an energy buyer fraught with difficulties, but it is important not to get sucked down into the mire.

James Summerbell, senior buying manager for Tesco, spoke to delegates at the SmartestEnergy annual conference this week, outlining the issues affecting energy markets from the supermarket giant’s perspective.

He said that the company’s combined gas and electricity consumption accounts for over 60% of its carbon footprint in the UK.

The concerns are predictable rising costs, price volatility and emissions.

“There’s been a bit of an illusion in the market because prices have come down, primarily due to the recession,” he said.

And while the price of oil has been hovering around a relatively-low $80 per barrel in recent weeks, “The reality is that prices are not going to go down any further,” said Mr Summerbell.

“Peaks and troughs in the prices of energy makes it very, very difficult to manage your business. It’s difficult to plan ahead if you don’t know what your energy costs are going to be.”

He said the company sets itself targets and looks for innovative ways to cut its energy supply while using self-generation where possible through biomass or turbines, and would stand behind alternative technologies by investing its own money in it.

Concerns go beyond sourcing cheap, reliable and sustainable power, he said.

“It’s not just about the electricity bill,” he said.

“Yes it impacts on your energy costs, but it will also impact on our suppliers which will impact on the goods we buy for sale to our customers – there’s a general inflationary impact.”

“[Our customers’] own energy costs go up so that’s money they’re spending on energy that they can’t then spend on the high street or elsewhere.

“That’s probably a bigger impact on our business in the long run than the direct impact on our electricity bill.”

He warned against getting weighed down by the challenges, however, arguing that these changes brought opportunities too.

“It’s very easy to descend into the mire and get very miserable about all this,” he said.

“There are opportunities. The truth is things like the feed in tariffs and ROCs enable us to do that and without those we wouldn’t be able to do these things and diversify our supply.

“You’ve got to ask us where the benefits are and cast the net wider – this creates a commercial opportunity for us within the markets and also to build a relationship with our customers and give them what they need.”

Sam Bond

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