Accenture Spend Trends Report: Energy Prices and Upward Cost Pressure

- August 25, 2014 6:23 AM
Categories: Category Management, Spend Management | Tags: ,

As we continue our coverage of Accenture’s Spend Trends Report, we turn our attention to the topic of energy prices and cost pressure. A number of Accenture’s findings are actually quite similar to a longer-term perspective we presented in a recent Spend Matters PRO research brief, Will the Cost of Energy Increase? On Statistics from the US Energy Information Administration.

As Accenture notes in their analysis, energy prices are continuing on a long-term up-trend with short-term pullback and volatility along the way, albeit with a underlying long-term inflationary undertone. On a related note, “oil and gas prices have risen steadily over the past several years. That trend is likely to continue—The International Energy Agency (IEA) forecasts oil demand will accelerate in 2015 as macroeconomic growth improves. However, oil and natural gas prices have pulled back in recent weeks, offering energy users some short-term relief and the opportunity to deploy layered hedging strategies to match expected demand with price risk tolerance.”

Part of the challenge on the generation side for energy are changing sources and their effect on reliability. As we note in our own analysis, a key “issue [that is] rarely mentioned is the reliability of power – renewable energy sources are fickle and don’t necessarily produce power when you would like them to. A traditional power plant with a 10 megawatt capacity can be expected to produce at over 90 percent of capacity 24/7 – whereas a wind farm of the same capacity will likely only produce at less than 20 percent of rated capacity.”

Of course there are numerous other variables as well in terms of energy trending and cost – which have a huge impact not just on consumer and retail operating costs in the US, but perhaps more importantly on manufacturing. We would encourage Spend Matters readers to take a closer look at both Accenture’s and Spend Matters’ analysis.

Stay tuned as our coverage of Accenture’s report continues.

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