How does the energy market work?
For many private individuals, the electricity market is an impenetrable labyrinth of figures, data and external influences that is simply impossible to penetrate. As a result, many simply live with the price that energy providers put in front of them - at most, they look for the best offer for them on comparison portals. However, Ferdinand Eggert, Sales Manager and authorized signatory of Energie Vertrieb Deutschland EVD GmbH, knows that purchasing electricity is somewhat more complex for companies: "The number of factors that need to be taken into account increases enormously in a business context. Commercial and industrial customers receive different conditions tailored to their needs. However, in order to actually be able to serve them, a basic knowledge of the market can't hurt." What appears complicated and opaque at first glance is based on the same foundation as any product in a free market economy when it comes to determining the price: supply and demand. This variable, which can often be calculated relatively precisely, can be somewhat more unpredictable due to external factors - including political ones, for example - and can also be subject to significant fluctuations. However, companies are in a position to take advantage of this model.
Not all electricity prices are the same
One thing in particular has become clear in recent years: The main part of the electricity price is not determined by the costs of generating and selling the product, but by taxes, levies and surcharges. "All of this has remained more or less constant over the past few years," reports Eggert. However, as already indicated, the energy market for the classic end customer cannot be compared with the version on which industrial and commercial customers operate. As with any commodity in the free movement of goods, there are wholesale and retail prices for a kilowatt hour of electricity. "The wholesale price is determined on the electricity exchange and quoted in euros per megawatt hour," explains Eggert. "In recent years, it has roughly averaged around 40 to 80 euros per megawatt hour, but has become significantly more expensive in recent months in particular." In addition, special events can cause strong upward and downward fluctuations. It is therefore crucial how well the electricity wholesaler and the actual supplier trade on the electricity exchange in the key date model and at what price they can then present the product to their customers. Especially against the backdrop of the current rise in energy prices, the right timing of purchases is becoming an important factor.
When the hour strikes
"However, the customer can also intervene directly in this process with so-called structured procurement," points out the EVD Sales Manager. "By keeping an eye on the market, a desired price can be fixed as a tranche in consultation with the energy trader. A percentage of the electricity consumption is then covered at these conditions." The situation is different again when concluding a spot contract: here, the basic market economy model of supply and demand is expressed in constantly fluctuating energy prices that can be determined to the hour. "If price fluctuations in the form of fixed prices only affect the budget after a certain period of time, companies can pay for their consumption on the EPEX Spot market at the respective active hourly times," explains Eggert. "At the end of the month, a volume-weighted average price is billed, which is often lower than the forecast fixed prices." With a spot contract, the consumer is therefore always exactly in line with the market. With expert advice from the provider and a certain understanding of the given conditions, medium-sized and industrial companies can take their charges into their own hands and act as flexible participants on the electricity market with the right model.
EVD Pool - Strong together
The EVD Pool is our answer to the challenges of the energy market. In our virtual power plant, we bundle our customers' various generation plants into a powerful unit that opens up all marketing channels. This means that even smaller plants with a capacity below the minimum bid limits can participate in the lucrative markets for balancing energy.
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Energy Sales Germany EVD GmbH
Founded in 2013, Energie Vertrieb Deutschland EVD GmbH has been selling electricity in the B2B sector with a focus on domestic SMEs since 2014. It is a subsidiary of Engergi Danmark A/S, a leading energy distributor in the Scandinavian region that has been operating since 1993. With various options, from fixed prices for several years to strategic and spot contracts and portfolio management, EVD offers its customers maximum flexibility in electricity procurement and thus the best opportunities to benefit from fluctuations in the energy market. EVD's customers include well-known big players from a wide range of sectors such as the food industry, logistics, pharmaceuticals, mechanical engineering and multisite customers with numerous locations, as well as many medium-sized companies and public institutions. An important part of the company's philosophy is also the increasing focus on the sale of green electricity and the strengthening of climate-neutral industry. EVD provides customers with all types of green electricity in all quality levels without restrictions.
