21 June 2022

Managing Director of EHA, Jan-Oliver Heidrich: “We offer reliability”

Energy prices remain a crucial issue for retailers and consumers alike. Managing Director of German energy company EHA, Jan-Oliver Heidrich, on the long-term procurement strategies and short-term factors influencing the price of energy.
Reading time: 5 min.

Based in Hamburg, EHA Energie-Handels-Gesellschaft is the REWE Group’s main provider of energy services. In our interview with managing partner Jan-Oliver Heidrich, we discussed fluctuating energy prices and asked for his thoughts on the trends for the years ahead.

According to a survey by YouGov, nine out of ten Germans are concerned about the rising cost of energy. How worried are you?

Jan-Oliver Heidrich: We have in fact been worried about the situation for some time. The trends we are seeing today were being predicted last year before the war in Ukraine. When it comes to supplying our customers, we have a clear strategy: be prepared. That’s why we buy long-term on the futures market and have already hedged our supplies for the current year, as well as much of 2023 to 2025. The advantage of this is that we do not have to purchase energy at high prices on the spot market to meet this share of the supply.

Jan-Oliver Heidrich

Managing Director of German energy company EHA Energie-Handels-Gesellschaft.

How does this impact the price EHA pays for energy?

Jan-Oliver Heidrich: As the current situation shows, in times of fluctuating prices what we offer is reliability. By purchasing energy in a structured and diversified manner, we can offer affordable, reliable prices that are affected only minimally or not at all by short-term impacts such as power plant failures or the resurgent post-pandemic economy.

When you buy in advance, you must have some idea of the expected energy prices over the coming years. How are things looking?

Jan-Oliver Heidrich: At present, the price of energy for 2025 is significantly lower than for the current year. It appears that the market participants are assuming that current prices are not sustainable in the long term. This suits us nicely as we are growing thanks to favourable conditions resulting from the futures market volumes that we have already procured. Notwithstanding the precautions taken, in the short to medium term we anticipate significantly higher energy costs for our customers, suppliers, and ourselves.

Many suppliers are currently demanding higher prices, citing the higher energy prices. How justifiable are these demands?

Jan-Oliver Heidrich: There’s no simple answer. But once again, the question is whether the company in question has relied on cheap prices on the spot market or instead prepared for the long term and ‘stocked up’ on energy. According to a survey by the German Chamber of Commerce and Industry, 50 percent of companies still need to purchase energy for this year and have in some cases covered only 30 percent of their energy needs. They are now paying the price for this strategy. If we simply follow the logic that higher energy prices lead to higher product prices, then suppliers would also need to lower their prices when energy costs go down. However, this has not been the case thus far.

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