Businesses, will energy cost you more this winter than last year?

Even though the situation has improved significantly over the past year, energy prices, and electricity prices in particular, are expected to remain high this winter for businesses. Decryption.

Which could still drive up business energy prices this winter

After a winter of 2022-2023 marked by soaring energy prices, the energy crisis in Europe has eased. However, it is far from finished. Energy prices are set to remain permanently high and businesses are among the first to feel it.

For the coming winter, several seasonal, climatic and economic factors could still cause new price spikes. A prolonged drought in Europe risks leading, for example, to a reduction in hydroelectric and even nuclear production. A strong economic recovery in China coupled with a very harsh winter are other factors likely to reignite tensions on energy markets, the International Energy Agency (IEA) has warned.

For these reasons, the French and European public authorities are maintaining energy sobriety instructions for this winter, a lever for action that is now essential for businesses and individuals alike. This winter and in the long term.

Winter 2024: for businesses, electricity prices will remain high

Although electricity market prices in Europe have fallen sharply in one year, they remain historically high. The wholesale price of MWh was around €100/MWh in July, compared to €40/MWh before the health crisis, and after peaks above €700/MWh during 2022.

The French government has for its part confirmed the gradual end of the price shield on electricity by the beginning of 2025. If VSEs can still benefit from it, other companies must opt ​​for electricity sales contracts reserved for professional customers. , whose prices will not return to their pre-2022 levels anytime soon.

How can we explain such persistent high electricity prices? First of all, by nuclear electricity production still below its normal level. The nuclear production target announced by EDF for 2023 is between 300 and 330 TWh, compared to 279 TWh in 2022. However, the production of French nuclear power plants reached 413 TWh in 2018 . Consequence: the country will have to continue to import electrons this winter, by purchasing electricity on European markets which has become expensive.

It should be noted that the extent of the increase in the electricity bill for a company depends on the type of contract and the date on which it signed it. Certain fixed price contracts signed before 2022 remain favorable, because they are based on tariff levels calculated before the price surge, but these contracts will expire naturally over time. The mechanisms are therefore very different from those of private contracts.

Towards a return to normal in gas prices

On the natural gas side, the fever has passed. World prices are returning to their usual levels, after the historic peak recorded last year. By replacing Russian gas with other sources of supply, notably American LNG, and by optimizing storage, Europe resisted.

Sobriety also played an important role. Engie considered the reduction in energy consumption last winter “remarkable”, with a drop in natural gas consumption, excluding climate effects, estimated at 13%. Gas storage has returned to very satisfactory levels since the spring and should be full at the end of August, Engie reassured.

Barring a particularly harsh winter, companies should therefore benefit in the coming months from gas prices close to their pre-war level in Ukraine. Good news for European competitiveness.

Energy prices: what help this winter for businesses?

The overall trend is clear: it is a gradual decline in public aid for businesses. The public authorities have not yet specified what will happen in 2024, but in the meantime, certain energy aid for businesses has been extended until December 31, 2023. Among them:

• The price shield on the electricity bill for VSEs . It concerns very small businesses with fewer than 10 employees, whose turnover does not exceed 2 million euros and which have an electric meter with a power of less than 36 kilovolt-amperes (kVA). The tariff shield limits the increase in regulated electricity sales tariffs (TRV), which still increase by 10% on August 1, ²⁰²³ .
• The electricity shock absorber , reserved for VSEs, SMEs and local authorities not eligible for TRV and therefore for the tariff shield. It covers approximately 20% of the total electricity bill, provided that the unit price of the energy portion reaches at least €350/MWh
• The Help desk for paying gas and electricity bills , intended for businesses of all sizes whose electricity or natural gas bills have increased significantly.
• The guarantee of energy supply contracts , reserved for mid-sized companies and large companies. This is a public guarantee fund launched in March 2023 for companies that consume a lot of gas or electricity.