Sourcing green energy

Green business energy is proving more popular than ever as businesses increasingly set out a procurement energy strategy aligned to sustainability as well as cost.

While not all businesses are able to generate their own energy – a sustainable way of putting less pressure on the national grid – green energy contracts are widely available.

But what exactly is a green energy contract?

Basically, the gas and electricity that powers your premises of work comes from a supplier who has sourced it through a renewable energy generator such as wind or solar farms, hydroelectric power stations or biomass plants.

The amount of energy from renewable sources differs from supplier to supplier; however, it is a legal requirement for them to publish details of their fuel mix.

The more businesses (and households) that adopt this policy, the more renewable energy is fed back into the grid, and the country’s dependence on fossil fuels reduces, helping to alleviate the onset of climate change as a result.

If you’d like some advice on the range of green energy contracts that are currently being offered on the market, please get in touch with one of our energy consultants on 01225-867722

Energy procurement strategy – your questions answered

Energy framework

A good energy procurement strategy optimally matches your business needs with the many choices that are available when it comes to buying energy.

Energy is often one of the biggest overheads for a business, so it is crucial to adopt the right approach in how you go about purchasing your gas and electricity.

Here are a few FAQs around the subject that may help in your decision-making process.

What is the best Energy Procurement Strategy for 2020?

The best strategy will be determined by the needs of your unique business.

Energy prices fell dramatically during the early stages of lockdown to reflect the lack of demand, but following the easing of restrictions and the resulting step up in business activity, they are now climbing out of what appears to be a market trough,

Even so, energy suppliers are being selective about who they deal with and are avoiding perceived high-risk industries, such as hospitality, catering and travel, that have all come under intense pressure since lockdown started back in mid-March.

Businesses within those sectors on a fixed energy deal in a market where prices are rising will feel they are in a relatively good position from an energy procurement perspective as they’ll be protected against the prospect of being hit by increased risk premiums.

However, these are unchartered times, and without a crystal ball, managing risk has never been more important. Hence, having the correct strategy in place and being able to respond quickly to opportunities as they arise is crucial.

What is the best Energy Procurement Strategy to manage risk?

Simply put, it’s the strategy that’s most suited to the business. But first, you need to understand the role of risk in your business.

Some businesses do not have the option of adopting higher risk for potentially higher financial returns as budget stability might be more important to them.

Your business may have long-term fixed customer sales contracts which do not allow for passing on increases in energy costs to your customers.

In order to protect profit margins, having fixed price energy contracts is preferential to having the opportunity to take advantage of falls in the energy markets. This is because the risks of energy price increases would ultimately be more damaging to the financial performance of the business.

For energy-intensive businesses, in order to compete on price, it’s important that you’re buying energy at the current market rate, so a flexible contract that tracks the market could be advantageous.

As a general comment, a fixed price contract which is renewed when the energy markets are low has historically added value, particularly as they often avoid increases in non-commodity costs.

What is the difference between a fixed and flexible energy procurement strategy?

Most people view flexible contracts as riskier than fixed ones but, in reality, they can be used as a hedging tool to smooth out the volatility of market movements.

A flex contract enables you to fix any amount of energy for any period of time. For example, you could fix energy prices for half your anticipated consumption for the duration of the contract, and let market prices dictate the cost of the other half once you have interpreted market dynamics through the use of helpful energy management analytical tools such as EM-Powered. The price you then pay is the average between the two actions.

Whether a fixed, midi-flex or full flexible strategy is adopted, it is important to have a dynamic approach. By this, we mean fixing contracts when market movements present opportunities and not when you come to the end of a fixed period contract in the blind hope that the markets will be favourable.

How can Energy Management guide you in your Energy Procurement Strategy?

We can assist you by establishing and implementing an energy procurement strategy that best serves the needs of your business.

Once the right products have been selected and delivered, the performance of energy suppliers will be audited to ensure optimum budget management moving forward.

Ongoing invoice validation and budget management are also key in managing your energy procurement strategy.

Sign up to our Market Intelligence report

Analysing the factors behind why business energy prices have risen or fallen over a month-long period, our Market Intelligence report helps to give customers a handy overview of market conditions as they plan their energy strategy.

Before you make any energy procurement decisions it is important to understand what the energy landscape could look like in the future in order to get the best deal at the right price.

So many factors influence the price a business has to pay for their electricity and gas and the Market Intelligence report breaks these down in an easy-to-read format accompanied by historical and present-day price graphs.

To sign up, simply fill in the short form at the bottom of the page.

Meeting the challenges of energy procurement head on

COVID-19 has brought so much uncertainty to the world as people wonder what their future prospects may be, personally or professionally.

The energy market has certainly not been immune to this either, with plummeting oil prices amidst a major downturn in business energy consumption being reflected in historically low business energy costs.

And renewable energy projects and EV installations, which were set for a boom year in 2020, have been held back, especially in the initial stages of the pandemic, because of a disrupted supply chain.

With so many factors to consider – political posturing can also be thrown into the mix – understanding the market and the mechanisms that may trigger wild fluctuations in the price of electricity and gas is vital to successful energy procurement negotiations.

Even for the most trained eye, unprecedented times like these can be extremely challenging for brokers in advising clients on when to sign on the dotted line with energy suppliers, and the length of contract most preferable for their needs.

A good level of market intelligence – through experience and software such as EM-Powered, the energy management portal – is vital in procuring energy at the right price and at the right time.

Minimising those energy costs through smart energy procurement – and taking the hassle away from clients – is at the heart of what we do.

With over two decades’ worth of experience, Energy Management explores the range of options available to their clients, from a fixed-price, longer-term arrangement that allows for greater security, planning and budgeting to a more flexible approach, where advantages can be derived from fluctuations in energy pricing.

Our consultants are experts at knowing which way ‘the wind is blowing’, so why not give them a call, on 01225-867722 or email:sales@energymanagementltd.com

 

An energy framework designed to tackle the climate change emergency

The climate change emergency was at the front and centre of the news agenda before Covid-19, and even while we are still in the grip of the pandemic, it is an issue that has rightfully refused to go away.

We have found that in our discussions with clients and potential new customers that the drive towards a carbon-neutral position – by 2050, or even 2030 in some cases – is still a key focus.

Figures released by BloombergNEF showed how purchasing green energy contracts rose by 40% on the previous year in 2019, reaching almost 20 gigawatts (GW), and that appetite for change is still there if our experience is anything to go by.

Our Choice Energy Framework is proving to be a popular option for those public sector organisations looking to not only save money in their energy procurement but also be more ethical in the way they power their facilities.

There has been tremendous interest in securing green energy contracts – ones that use wind and solar energy, for example – as opposed to traditional brown energy that relies on fossil fuel power generation.

The Choice Energy Framework involves up to six energy suppliers who have been shortlisted on the basis of tariff competitiveness, billing accuracy, max/min volume threshold restrictions and terms and conditions.

Fixed and flexible contracts will be offered by the suppliers with the length of the contract varying from 12 months to as long as four years.

If you would like to find out more, please contact one of our team on 01225-867722

Renewed focus for green energy procurement

As the UK strives towards a zero-carbon future, green energy procurement has become a key focus for such minded companies.

Switching away from fossil fuels to renewables has become much more straightforward given the increase in the range of options available, such as solar and wind turbine generation, and the growing affordability of the energy such methods produce.

Today, renewables produce more than 20% of the UK’s electricity, and that figure is forecast to rise to 30% by 2030, especially with the largest solar farm of its kind to be built shortly in Kent.

Organisations are now aligning their energy strategy to reflect the shifting trend, with increased investment in renewables gathering momentum.

Supporting sustainability

As one of the UK’s leading consultancies, Energy Management LLP recognises this and has devised a Green Energy Framework (GEF), which is designed to support public sector bodies in their commitment to a more sustainable future.

Incorporated within the over-arching framework agreement is a desktop audit of current energy efficiency schemes and analysis of half-hourly (HH) energy consumption data.

Once these initial steps are taken, a site survey is then conducted by one of our chartered engineers, and based on their findings, a detailed action plan highlighting areas of improvement will be discussed with clients.

At Energy Management, we are committed to helping clients for the whole duration of their journey towards net-zero carbon, and ongoing support is available through accountable auditing.

The Green Energy Framework follows on from the successful launch of the Choice Energy Framework, another of Energy Management’s initiatives that allow public sector bodies to access the best energy solutions.

Swing and you’re winning. Is now the best time to renew your energy contract?

All crises create winners and losers and the coronavirus pandemic is no different when it comes to how much businesses are paying for their energy.

Compare electricity and gas prices from the period before the pandemic took hold and adversely affected so many lives, to today’s market and there is no comparison.

With the global economic slowdown came a vast reduction in energy consumption – by as much as 38% in April – as factories and offices shut up shop, and prices plummeted as a result.

Summer 2021 electricity prices took a massive hit, falling by 32 per cent from the start of October until May 20, dropping from £55.01 to £37.50, while Summer 2022 swung by 24 per cent.

In terms of gas, there were equally big fluctuations over the near eight-month period. As of May 20th, Summer 2021 prices had gone from £53.34 to £30.23 – a 43 per cent reduction.

Our team of expert energy consultants constantly analyse the energy markets to help clients try and strike deals with suppliers at just the right time.

Whilst this is clearly not an exact science all the indications at present are that this is a good time to review your energy contract renewal options.

We are slowly starting to see the forward prices recover as the lockdown restrictions start to ease, but these costs are still low based on wholesale costs back in October/November 2019.

That lag won’t last forever though, and as more and more people go back to work, there will be an inevitable knock-on effect on prices as demand for energy increases.

If you would like to talk to us about your renewal options, please give us a call on 01225-867722.

Making better energy choices

Business and Commerce is in a very strange place at this time, some businesses have seen a sharp upturn in turnover as they fulfil the country’s requirements over this “lockdown” period, such as bicycle manufacturers, thanks to the sharp upturn in that particular form of exercise, while others simply had no choice but to heed the government’s advice and close their doors.

The downturn in the UK and world economy has lowered the demand for energy, and wholesale prices have followed suit. Short-term markets have taken the biggest hit, but markets further out have also reduced during this period, reflecting an uncertain future.

Energy Management is always on hand to assist clients old and new, either via a call, an email or through our bespoke portal reporting software ‘EM-Powered’.

Clients who benefit from EM-Powered find it helps them make better-informed decisions over their energy-related strategy.

It enables our clients to view and report on a range of information for your business including consumption, cost data and carbon production, plus provides up-to-date market information.

For more information about EM-Powered and an online demonstration of the portal, contact a member of the team now on 01225 867722 or email sales@energymanagementltd.com

Brent Oil has dropped to an 18-year low

Brent Crude Oil dropped to an 18-year low on 30th March, prompting a knock-on effect in the energy price market.

The commodity’s international benchmark fell by as much as 13% to a low of $21.65 a barrel. Meanwhile, the price of US West Texas Intermediate (WTI) fell below $20 a barrel and also closed to an 18-year low.

The global oil industry has faced a sharp drop in demand due to countries across the globe being on lockdown due to the coronavirus with prices falling by more than half in the past month.

Despite this, Saudi Arabia and Russia have agreed to flood the market with oil in April and a rise in the price of energy is expected on the back of this, certainly if you compare electricity prices and gas prices to those in March.

So, if you are looking to get a price for your gas or electricity (or both) while this window of opportunity within the market exists, then please get in touch with one of our sales team on 01225 867722 or email sales@energymanagementltd.com.

Oil industry being pulled in both directions

With a situation where ‘demand is down and supply is up’, oil industry prices continue to suffer in what can only be described as ‘Mad March’.

While the coronavirus pandemic continues to tighten its grip on society leading to a cut in fuel consumption as the global economy slows down, disputes between Saudi Arabia and their rivals has seen the top oil-producing country raise output to full capacity.

Slashed prices

Saudi Arabia slashed export prices and said it would pump at a record of 12.3 million barrels per day, flooding the market with oil that it didn’t need. By contrast, producers in the USA’s top producing state, Texas, have asked for regulatory intervention to reduce production.

International crude oil prices LCOc1 CLc1 have dropped about 45% this month and don’t even cover the cost of much of the world’s production, causing energy companies worldwide to drastically rein in their spending. March 9th witnessed the biggest single-day drop of 24%.

The collapse in demand and a diplomatic impasse between Saudi Arabia, Russia and others have triggered unprecedented responses from governments and investors.

As Reuters reports, it is an industry in distress.

With business energy prices fluctuating wildly, knowing when to strike a deal with suppliers has become an art in itself.

Smart energy procurement is one of the main ways in which companies can save money and our expert knowledge and ability to keep track of the markets in these most volatile of times, makes us very well placed to take care of that side of your business.

If you would like to have a conversation with one of our team of consultants, please give us a call on 01225-867722 or visit our dedicated energy procurement page.