The surge in energy prices has been a global phenomenon since 2021, as countries worldwide attempted to resuscitate their economies following the Covid-19 pandemic, triggering increased demand for energy.
Further compounding the situation was the Russian invasion of Ukraine, which constricted supply. This combination of increased demand and decreased supply resulted in a price explosion, causing your electric bill to soar in recent months.
Today, we will explore how you can leverage this situation to your advantage 🌍💡.
Contents
The Surge in Energy Prices
The early months of the Covid-19 crisis saw a significant drop in global energy consumption, which led to a slump in fuel prices. However, these prices have rebounded since then, primarily due to an exceptionally swift global economic recovery. Natural gas prices have increased the most, with European and Asian benchmark prices reaching an all-time high in August 2022, approximately ten times their level a year ago.
As of the day of this recording, natural gas prices in the United States have more than tripled since October 2020, hitting their highest level since 2008. Similarly, international coal prices are about five times higher than a year ago. As we approach the winter season, coal power plants in China and India, the world’s two largest coal consumers, are facing extremely low stocks.
These increases in natural gas prices have led to a significant shift away from using natural gas to generate electricity in key markets such as the United States, Europe, and Asia. This shift towards coal is, unfortunately, resulting in increased global CO2 emissions from electricity generation 😓.
The Impact on Electricity Prices
Higher electricity prices are the result of these escalating gas and coal prices, in addition to rising European carbon prices. For instance, electricity prices in Germany recently hit an all-time high, more than six times higher than a year ago. This increase was even more pronounced in Spain, where gas-fired power generation plays a larger role in determining electricity prices. Moreover, lower-than-expected wind generation has further exacerbated the upward pressure in recent weeks.
The World Bank anticipates energy prices will continue to rise by more than 50% in the next two years.
Turning the Tables: Capitalizing on the Price Explosion
So, how can we turn this situation to our advantage? While the natural inclination might be to invest in energy companies with the expectation of high returns, the reality is not so straightforward. Many businesses are likely to suffer from the dual negative impact of rising energy costs and a potential decrease in consumer spending due to increased energy-related expenses among households. Hence, it’s not advisable to expect any multi-bagger returns from energy stocks.
If you’re keen on investing in the energy sector, a better focus would be on alternative energy companies. Here are five alternative energy business ideas that you might find beneficial in this era of energy and gas price explosion:
- Biodiesel Production: A small-scale biodiesel production unit can be started anywhere Jatropha oil, the main raw material, is readily available. This could be a viable option considering the ongoing search for renewable fuel sources in light of fossil fuel depletion.
- Solar Panel Installation: Solar panel installation specialists are highly sought after globally. However, this requires specific knowledge and experience. Promoting your service-based business is also crucial.
- Automobile Battery Store: Batteries are an essential power solution for any type of vehicle. A battery store can be started with moderate capital investment. It is advisable to start with reputed brands.
- E-Vehicle Distribution & Selling: E-vehicles are gaining popularity and their batteries are an essential power source. Starting a battery store for e-vehicles could be a good business idea.
- Sell Power Plans: Selling power plans can be an engaging business idea. This could involve offering a variety of renewable power sources to customers living in camps or using RV vans. These plans allow customers to live off-grid, providing a modern approach to utilizing renewable energy.
We hope you found this video informative and useful. Do you have any other insights on this topic? Feel free to share your views in the comments section below, and we’ll pin the best comment. Don’t forget to subscribe to our channel for more informative videos like this one. We look forward to seeing you in our next video 🎬📹.
