Ukraine crisis: Energy Repercussions Will Be Felt by European SMEs

Should businesses fear the current developments in Ukraine and Crimea?

Generally, political upheavals should not be ignored. However, there is a trend to overemphasize the consequences of the Crimea crisis. The previous crises in 2006 and 2009 are an indicator that long-term consequences are unlikely, because the dependency is mutual. As there are several pipelines connecting Russia to Europe, even a complete loss of transits through the Ukraine would not significantly endanger European consumption, especially given the fact that the cold winter months are over and natural gas isn’t as needed for heating.

How may this impact on the energy cost category for European businesses?

It is important for European businesses to be well-informed about the current developments on the energy markets. Without an in-depth knowledge of the current prices energy is traded for on the energy exchanges, it can be very hard to make good decisions about purchase strategies. For example, spurred by the crisis, a purchase manager might decide to ensure the energy delivery by renewing existing contracts now, before the crisis intensifies. In our opinion, this step can be beneficial, but depends a lot on the conditions of the current contracts. Despite what one might expect, given the crisis, prices for natural gas have been falling for several months.

Should businesses diversify their energy sources?

For most businesses, diversifying their energy sources on a level that would be necessary to circumvent dependency on supplying nations isn’t possible. For example, a medium-sized enterprise doesn’t have the consumption that would make buying Liquefied Natural Gas (LNG) directly in Rotterdam feasible. Measurements that are possible include producing their own energy – this lessens dependency from electricity, natural gas, however, can’t be economically self-produced. To ensure long-term stability, one of the most efficient measurements possible is improving energy efficiency. This way, overall energy consumption can be reduced, ensuring even medium-sized enterprises can make themselves less affected by geopolitical changes.

Are European businesses developing their use of renewable energy – and how?

The reaction of European businesses to the political decision to gradually make renewable energy the most important source of energy is much diversified. Especially in nations with very firm commitment to this goal, like Germany, Austria and Spain, businesses participate by installing producers of renewable energy, especially solar panels, themselves. Other sources of energy production, such as the construction of CHP-plants powered by biogas, are on the rise, too. A factor that shouldn’t be neglected is the publicity that can be gained by being energy efficient and relying on renewable energy. Many businesses buy Renewable Energy Certificates on top of their electricity, thereby creating a connection to a renewable energy producer.

 

Peter Dächert

For the past four years, Peter Dächert has led the Expense Reduction Analysts Centre of Excellence Energy (CoE) in Germany. The Centre consists of a team of 14 specialists and has its headquarters in Hesse. Projects in the energy category comprise long-term decrease of energy consumption by using innovative solutions. The team also works very closely with the client to develop possibilities of improving internal processes for energy purchase. This way, better price structures are often obtained. Flanking these measurements, the experts of the CoE help clients to optimally use furtherances, and eases. Before joining Expense Reduction Analysts, Peter Dächert was the manager of Planungsgruppe 96 GmbH, a company which specialised in energy and heat engineering. Mr. Dächert is a graduate engineer, who studied at the FH Gießen Friedberg. Academically, he volunteers as a reviewer for the "Akkreditierungsagentur für Studiengänge der Ingenieurwissenschaften, der Informatik, der Naturwissenschaften und der Mathematik e.V. (ASIIN)", an agency responsible for the accreditation of learning courses. He also works as an examiner and lecturer for the Hessian Chamber of Engineers.

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