Navigating the perfect storm: Five energy risks every board needs to consider
Changes in the energy market are creating significant organisational risk, threatening budgets, continuity and growth plans. This article outlines key considerations for leaders who want to get ahead of the energy risk.
Key takeaways:
- Electricity market volatility, energy demand growth and climate vulnerability are threatening the growth plans of Australian businesses
- Risks for businesses include operational disruptions, rising costs and derailed expansion plans
- Forward-thinking boards are starting to make energy security part of their enterprise risk management
Despite record renewables investment:, Australia is home to the world's most volatile wholesale electricity market in the world, making energy costs challenging to predict. Meanwhile, AI, data centres and industrial growth are driving a surge in electricity demand:, and extreme weather and climate vulnerability continue to test our energy grid’s reliability.
Historically, Australian businesses could treat energy as a commodity: – reliable, affordable, and someone else's problem to manage. But this perfect storm reshaping the sector is forcing leaders to shift how they think about energy: as a strategic asset that requires the same rigorous oversight as cybersecurity, supply chain resilience and regulatory compliance.
Board-level energy risks leaders can’t ignore
While energy-intensive sectors like manufacturing, mining, and data centres are more exposed, energy risks affect all industries and threaten multiple dimensions of business performance:
- Lack of operational continuity: Potential blackouts and controlled load shedding can stall operations
- Budget blowout: Extreme price volatility makes costs unpredictable
- Stalling expansion plans: grid connection delays could derail growth plans
- Falling behind: rising energy costs can undermine competitiveness
Forward-thinking leaders understand managing these requires active, strategic oversight – and they’re making energy security a critical part of their enterprise risk management.
They’re implementing energy efficiency measures, better procurement, load management, and installing on-site renewables and BESS to minimise overheads and cost uncertainty.
But where should leaders focus their attention?
Effective energy risk management starts with five key considerations.
1. Do you have a robust business continuity plan in place?
In recent years, Australia's grid has experienced several protracted disruptions due to storms, unplanned outages and other factors.
Understanding your organisation’s exposure to power disruptions and the cascading operational impacts is critical to business continuity. From quantifying downtime costs and mapping critical load dependencies to assessing current back-up capabilities and controlled load shedding vulnerability – these are all important to mitigating energy-related operational disruptions.
How comprehensive is your energy procurement strategy?
Factors like network tariff selection, retail pricing and peak demand charges can influence an organisation’s energy costs. Making the wrong decision can increase costs by 30% or more.
When you consider that energy costs are typically one of the largest single costs for Australian businesses, representing up to 30% of total overheads, that’s a painful jump.
In a volatile market, finance and procurement leaders are paying increasing attention to energy procurement strategies. They’re looking at energy contract terms to avoid getting locked into unfavourable rates. They want to understand the organisation’s hedging exposure and assess renewable Power Purchase Agreement opportunities. And they want to keep on top of regulatory changes that may affect existing or future procurement strategies.
2. How comprehensive is your energy procurement strategy?
Factors like network tariff selection, retail pricing and peak demand charges can influence an organisation’s energy costs. Making the wrong decision can increase costs by 30% or more:.
When you consider that energy costs are typically one of the largest single costs for Australian businesses, representing up to 30% of total overheads:, that’s a painful jump.
In a volatile market, finance and procurement leaders are paying increasing attention to energy procurement strategies. They’re looking at energy contract terms to avoid getting locked into unfavourable rates. They want to understand the organisation’s hedging exposure and assess renewable Power Purchase Agreement opportunities. And they want to keep on top of regulatory changes that may affect existing or future procurement strategies.
3. How can we invest strategically in our energy infrastructure?
You may be thinking about accelerating investments in on-site generation, battery storage or demand response capabilities.
On-site renewable energy production like solar combined with battery energy storage systems (BESS) can greatly reduce your reliance on grid-sourced energy and drastically improve your energy security. It can also insulate against volatile prices and shore up energy supply during outages to sustain business operations and critical infrastructure. With multiple government incentives and the declining cost of battery storage:, the financial case for on-site energy infrastructure looks increasingly appealing. Early adopters of BESS are already capturing new revenue opportunities and gaining strategic advantage before markets saturate.
Many leaders are evaluating whether to accelerate deployment or redirect capital to another part of the business. Making the right choice comes down to evaluating the strategic risks and opportunities of deferring investment vs. committing capital.
4. What risks does location pose to your business?
In a country as vast as Australia, exposure to grid reliability varies greatly depending on where you are. Queensland faces 80 MW reliability gaps: in 2025-26, while the figure is forecast much higher (390 MW) for South Australia in 2026-27.
For multi-site businesses, this regional variance creates significant complexity in reporting. A manufacturer with plants in both Queensland and South Australia faces dramatically different risk profiles at each location. What works as a hedging strategy in Queensland may be inadequate in South Australia. Energy procurement contracts that seem reasonable for one site may expose others to high volatility risk.
The organisations taking control are assessing the location risks of critical facilities, evaluating regional grid vulnerabilities and mapping supply chain risks where key suppliers are exposed to potential energy disruption. They're moving beyond national-level energy strategies to site-specific risk assessments that account for local grid conditions, regional weather patterns, and state-based regulatory requirements.
For those planning to expand or relocate, factoring a region’s energy reliability into the site selection criteria is also critical.
5. Is your organisation ready for compliance requirements?
Energy-intensive organisations also face a new regulatory landscape. Net-zero compliance requirements mean boards are under more pressure to reduce their emissions profile and ESG reporting risk.
Organisations emitting over 100,000 tonnes of CO2 need to meet emission reduction targets set by the Australian Government’s Safeguard Mechanism policy. They also need to establish robust reporting to meet the
National Greenhouse and Energy Reporting (NGER) Scheme and expanding climate risk disclosure requirements.
Engineering teams also need to understand connection requirements for demand response, voltage support, and power factor correction set by the Australian Energy Market Commission (AEMC).
Know your organisation’s energy risk
Effective energy risk management starts with understanding how and where energy is used. An energy efficiency assessment can be a good place to start, as it allows you to develop a plan for how you can improve usage and equipment, and reduce costs.
You can also evaluate your company’s energy risk: by:
- Forecasting the costs of your energy supply
- Estimating and quantifying the impact of a blackout
- Understanding the impact of changes in energy use
- Assessing what percentage of your company’s greenhouse gas emissions energy use accounts for
Turn energy risk into resilience
The organisations that will weather the perfect storm brewing in Australia's energy sector are those actively charting a course through it. They are stress-testing continuity plans and locking in smart procurement strategies. They’re investing in resilience infrastructure and treating energy security as the enterprise risk it has become.
They’re also viewing energy as a competitive edge, investing in on-site renewables and storage that will give them a structural cost advantage.
The storm is here. How will you prepare your organisation for its peak?
Weather the storm with BESS
Given the challenges outlined above, onsite storage is emerging as a key resilience tool - improving continuity, reducing exposure to volatility, and enabling growth when the grid cannot. Investing in energy resilience can be a better investment than you may think.