Cutting down on cost through smart energy procurement

Smart Energy Procurement

Businesses of any size can keep their energy spend in check simply by using less energy.

Identifying energy efficiency opportunities and then implementing measures to address them will reduce the amount of gas and electricity used.

Encouraging an energy efficiency culture at your company is one way of doing this, so that staff are conscious of the need to turn off computers and equipment when idle and lower consumption that way.

Physical measures such as the installation of LED lighting or more efficient heating or cooling system are other steps that can be taken.

Not one solution will fit all, however. Some businesses may operate on a single site, others across multiple sites, whilst working hours may differ.

Businesses that operate largely during daylight hours and have a lot of natural light coming into the building, for example, will spend less on lighting than one that largely operates at night.

Proactive procurement

But one thing that all businesses should have in common is a desire to get the best business energy deal possible.

In the early days of the energy management industry, businesses tended to wait until they had a month left on their present deal before contacting energy suppliers and then renewing.

But energy procurement has moved on and it is smart business nowadays to be much more proactive in the process.

Whilst no business owner or energy manager in charge of the energy procurement process can be expected to plot the future course of energy prices – an impossible task given there are so many factors affecting prices – they can arm themselves with enough market information to make as informed a choice as possible.

Timing is key

Knowing when to put pen to paper and whether to fix the energy price or remain flexible are key to a successful outcome.

At times such as these, where there is a lot of upward volatility, it is more important than ever to make the right decision.

“It is all about knowing when to procure, what type of procurement and then getting on and doing it,” said Energy Management consultant Malcolm Barrington.

“We have signed up people a year-and-a-half ahead of when their current energy deal expires because the markets are in such a position at that time it is of benefit to do so.”

If you would like to draw on our vast experience, to help you in the energy procurement process, please get in touch on 01225-867722.

EM-Powered: Understanding energy price inflation

Management of Business Energy Consumption

With wholesale gas and electricity energy prices rocketing ahead of the October peak month for switching, it now more important than ever for businesses to monitor and review their energy consumption and devise an effective energy procurement strategy.

Electricity prices have surged to their highest level in over a decade according to data from the Department for Business, Energy & Industrial Strategy (BEIS), while average gas prices for Q2’21 are up 30% year-on-year for medium-sized businesses on one to five-year contracts.

According to BEIS’ survey of non-domestic gas prices in Q1’21(3), large and very large companies saw quarter-on-quarter increases of 3.5% and 3.2% respectively and further increases are anticipated in Q2’21 due to tight market conditions and increased demand for gas globally.

It is interesting to note, however, that there have been marginal declines in Third-Party Costs (TPCs) as a proportion of all energy costs over the last three months in both the electricity and gas sectors.

Amid such volatility in the business energy markets, energy management portals such as EM-Powered can be an invaluable resource for monitoring how the overall picture is shaping up in the UK and mainland European countries.

Em-Powered enables users to access historical wholesale gas and electricity price graphs to get a better understanding of whether the current trends are likely to be short or long-term – invaluable when it comes down to energy contract negotiations.

If you would like to find out more about EM-Powered and the many benefits it brings to the energy procurement process, please get in touch with one of our consultants on 01225-867722

Stay informed with the Market Intelligence bulletin

esos phase 3 reporting

What the first half of the year has reminded us of is that there are multiple variables affecting business energy prices, some predictable and others not.

Having as much insight as possible into the way different factors may lead to bullish or bearish runs in the business energy price markets is essential to good energy procurement, which is why we produce a free to download energy Market Intelligence monthly bulletin.

Available in PDF format, Market Intelligence helpfully breaks down the trends in the Gas, Oil and Electricity markets, whist giving updates on significant changes in areas such as legislation and compliance and information about Third-Party Costs (TPCs), enabling energy managers and business owners to make informed decisions when it comes to signing energy contracts with suppliers.

Whilst the business energy markets have always had the capacity to be volatile in nature, from January to June 2021 prices have arguably been influenced by a greater array of factors than ever before.

Who’d have thought that a giant cargo ship would have run aground in the Suez Canal and brought the world’s busiest trade route to a standstill for over a week, for example?

Politics has played a part too, with President Biden being sworn in and making some statement policies over carbon net-zero, whilst Brexit has been put into action over here in the UK.

Factor in decisions from OPEC+ countries over levels of oil production, cyberattacks on US oil pipelines, the maintenance season in the North Sea, the ups and downs of the British weather as well as the ever-changing picture over natural gas storage levels, and it is not hard to see why business energy prices can fluctuate so wildly.

If you feel you would like to be more informed about what shapes the business energy markets, just fill in the short form at the bottom of our home page and we will notify you as soon as the latest report is released.

The reasons for outsourcing energy procurement

Energy Procurement Reporting Graph

Predicting the business energy price markets has been a fairly straightforward exercise over the summer months with the general trend being upward.

However, due to a number of factors directly related to the energy industry or not, this is not always the case.

Geopolitical issues can also play their part in affecting supply and demand for gas and oil, and therefore prices, which makes forecasting the markets anything but an exact science.

Industry knowledge and the right energy market tracking tools and software, however, can mitigate against some of the uncertainty and help ensure companies pay the right price for their business energy, at the right time.

Not all businesses have the necessary in-house expertise or the time or staff dedicated to identifying the peaks and troughs of power prices, which is where reputable energy consultancies come into their own, especially ones with access to bespoke energy management portals such as EM-Powered.

Outsourcing energy procurement to a trusted and reputable energy consultancy can take the pressure away from businesses and ensure they are not paying over the odds for their gas and electricity or signing up to unfavourable terms and conditions that may lead to penalty charges down the line.

With Third-Party Costs (TPCs) now making up the majority of a business’s overall energy bill, an understanding of energy legislation and keeping abreast of all the latest developments in compliance is also vital.

At Energy Management, we have been helping clients with their whole energy services portfolio for over two decades and support clients in a variety of different industries, in both the private and public sectors.

If you would like to speak to one of our consultants about energy procurement, invoice validation, compliance or any other energy-related matter, you can contact us on 01225-867722,