Industrial performance

The impact of the energy price increase on the industry sector

In 2021, the price of natural gas has increased by 300%. For electricity it is even worse. The increase reaches 500% in one year! If the reasons for this increase in energy prices are multiple and complex, one thing is certain: this energy crisis has a direct impact on industry.

The reasons of this price increase

Gas is suffering from an imbalance between supply and demand

The end of the COVID crisis has led to a strong rebound in global industrial activity in 2021, which has caused a sharp increase in gas demand.

To make things worse, the winter of 2021 was particularly cold in Europe, which caused a sharp decrease in gas stocks. The subsequent replenishment of stocks has thus led to a mechanical increase in prices.

Geopolitical tensions and war in Ukraine

Russia and Norway are the main suppliers of natural gas to France and Europe. In 2021, the supply from these two countries was not sufficient to meet the increase in European demand.

Russia's invasion of Ukraine in early 2022, and the resulting tensions, have significantly exacerbated the problem. In order to deprive Russia of colossal sources of revenue, the European Union is now seeking to limit its dependence on Russian gas and European gas infrastructure operators are preparing for all scenarios. 

 

In 2023, there will probably be gas shortages, which will primarily affect industry!

 

 

The price of electricity is also directly impacted

In 2021, the rebound in industrial activity has generated a peak in electricity demand. As electricity cannot be stored, this increased demand has been met by the commissioning of gas-fired power plants. The price of gas therefore has a direct impact on the price of electricity.

Industry is strongly impacted by the rise in energy prices

Increasing energy consumption

Manufacturers are the first to be exposed to these energy price increases, because their consumption is strongly linked to their productivity. Industrialists need to consume in order to produce, so they are hit hard by these fluctuations.

These rising prices are then passed on to their margins and those of their customers, which contributes to increasing the price of manufactured products.

 

Some sectors more affected than others

Naturally, energy-intensive sectors are more affected than others by this boom in energy prices. For the production of medicines, metals, paper/cardboard, cement or glass, the share of electricity and gas consumption has always weighed heavily: between 10 and 60% of total production costs.

These increases have weakened certain industrial sectors, significantly reducing the positive impact of the economic recovery. The pharmaceutical and chemical industry, the most energy-intensive sector in France, is expecting to see its growth slow to a crawl : 1 to 2% in 2022, compared to 6% in 2021!

How to reduce the impact of this rise in energy prices ?

This increase in energy prices is the consequence of several factors that industrialists are unable to control. 

What can be done to avoid being totally affected by this price increase?

Fortunately, there are solutions that allow manufacturers to reduce their energy bills. 

Experts like Energiency can help you act!

 

Let's go even further in terms of energy savings !
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