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

 

Switching energy suppliers – what you need to know

Energy is often a business’ biggest running cost after wages. That is why it is crucial to ensure you are not paying over the odds for powering your office, factory or warehouse, particularly if you prefer the security of a fixed-term contract over a more flexible arrangement.

Many energy contracts simply rollover once the current term expires, and this can lead to a business paying more per unit for their gas and electricity than they need to.

With the market as volatile as it is right now, switching energy providers can be in your best interests. Normally, your energy supplier – whether it is one of the so-called ‘Big 6’ or one of the smaller operators – will contact you up to six months before your contract enters its renewal window.

Armed with the facts

At this time, it is important to have all the right information to hand and to understand how, when and where you are consuming the most energy, especially if you operate over multiple sites, as this could impact on how much you eventually pay.

Switching energy suppliers can take anything between four to six weeks but without any disruption to your current supply.

Many businesses, particularly at times of great stress, either don’t have the resources to handle this energy procurement process or do not have the expertise to shine a light on unfavourable terms and conditions which may hit the business financially in the long run.

If you consider yourself to be in such a situation, we’d be more than happy to assist you in getting the right deal at the right time and for the right duration.

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.

An energy framework that delivers for the public sector

Energy framework

Looking after the health, fitness, safety and education of the nation does not come cheap. In 2019, the figure for powering the public sector was estimated to be an eye-watering £3.4 billion.

Keeping offices, hospital wards, classrooms and leisure centres heated, lit, ventilated and air conditioned contributes towards a large percentage of a local authority’s total expenditure.

Controlling costs is a key focus for councils under financial pressure. Fundamental to this goal is smart energy procurement, even more so in times when the markets are volatile due to a host of geopolitical factors and health-related issues such as the coronavirus outbreak.

Buying energy is not always straightforward but the Choice Energy Framework (CEF), which involves a panel of six pre-selected suppliers, makes it as simple and as competitive as it can be.

With a range of supply parameters to consider (e.g. scope of services, technical capability, procurement mechanism), public sector clients need to have access to easy and ready to use Value for Money resources.

The aim of CEF is to make procuring these services more user-friendly. It minimises the cost of energy procurement while retaining accessibility and transparency.

Approved by The Official Journal of the European Union (OJEU), the CEF enables signed-up organisations to avoid time-consuming form filling and could save them as much as £20,000 in admin fees.

The CEF has been developed by Shepton Mallet Town Council and is being managed by Energy Management LLP.

The result of this is a Framework Agreement designed and procured by the public sector, for the public sector, applicable throughout the United Kingdom.

For more details on CEF, click here.

Coronavirus and the energy price market

energy price

Subscribers to our Market Intelligence monthly bulletin will be only too aware that there are a multitude of factors driving the energy price market.

If you compare business electricity prices from one day to another, they can look very different depending on how bearish or bullish the market is.

On top of all the geopolitical and meteorological factors at play, the coronavirus is an extremely unwelcome addition to an already complex situation.

With the viral outbreak spreading to more countries, the price of oil has dropped markedly as global demand weakens even further due to production cuts in places like China, the source of the COVID-19 disease.

Brent crude, the international standard, dropped 14% for the week to its lowest levels since July 2017, closing Friday at a fraction over $50 a barrel. Cuts in oil production are now being called for by countries such as Saudi Arabia to stabilise demand.

For any energy consultant, such scenarios present challenges, especially around energy procurement, which is why experience is so important in good energy management.

Through years spent in the industry, Energy Management’s energy consultants know the markets inside and out and are across all the news that could impact on our clients’ energy deals.

And this knowledge is complemented by energy management portals such as EM-Powered and its wide-ranging benefits, including the ability to compare business energy consumption over specified periods of time.

That historical data can then be used to help our energy consultants make better-informed decisions on the type of energy procurement right for your business.

Why energy procurement is best left in the hands of the experts

For the first time in history, more UK power came from renewable sources than from fossil fuels in the calendar year ending December 2019.  National Grid described it as “a historic moment”.

Wind power provides the largest percentage of the UK’s overall renewable energy output, making up 20% of the UK’s electricity following a series of major windfarm openings in recent years.

And with energy derived from solar power around the 6% mark, roughly a quarter of the UK’s renewable energy output is dependent on the right weather conditions.

While the wind is blowing a gale at the moment, thanks to Storm Dennis, that’s not always the case and, as we all know in this country, the sun can never be trusted to shine as long as we’d like it to.

Market vulnerability

But the vagaries of the weather are not the only strong drivers when it comes to the price people pay for their electricity.

From faulty nuclear reactors to the US-China trade talks and even the assassination of Iranian warlord, Major General Qasem Soleimani, the last few months alone has illustrated how the market is vulnerable to a host of geopolitical issues.

Understanding the market and the mechanisms that may trigger wild fluctuations in price is an important facet of energy procurement.

Right price, right time

A good level of market intelligence – through a combination of experience and accessibility to 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.

Speaking literally, 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

 

Energy Procurement – the key things to consider

With so many external factors determining the price of the fuel we pay, from international trade disputes to extremes of weather, procuring gas and electricity at the right price and at the right time can seem like a daunting task at times.

Here, we list some of the key things you need to consider before entering into negotiations with energy suppliers.

Be pro-active

Prices can fluctuate wildly in a matter of hours so extra vigilance when it comes to monitoring markets is key. What seems like a good deal one minute may not be so good the next; nobody has a crystal ball so set triggers/alarms in your monitoring process to minimise risk.

Having access to software such as EM-Powered, our bespoke energy management portal, certainly helps in this respect.

Time of contract

It’s important to get familiar with your Contract End Date so you can weigh up your options well before it is time to put pen to paper on a new deal.

You can fix a contract in advance depending on the level of budget certainty you want. Doing this ensures guaranteed payments, or alternatively, you may wish to choose a flexible contract to access market-reflective prices and gain potential rewards.

Signing a Purchase Power Agreement, for example, is a great way to get ahead of your competitors, showcase your commitment to sustainability, and plan for risks while leveraging value for your organisation.

Terms and conditions

Get down to the detail and ensure the terms and conditions are suitable for your business, otherwise unwanted penalty charges may occur, or you could be locked into a contract that no longer works for you. Volume Tolerances and Max/Min thresholds are two examples of areas that can get overlooked.

Invoice validation

Check your supplier bills are correct. On average, 20% of them are wrong, amounting to 5% of the overall bill value, simply because data may have been entered incorrectly. Only pay for what you use!

Negotiate

Remember, if you don’t ask, you don’t get. It’s a simple adage but one that rings true in all facets of a business. If you don’t feel comfortable doing this because of a lack of expertise in energy procurement, you can always employ an external energy management consultancy to get the best deal on your behalf.

What is an energy procurement manager?

Energy procurement is the process in which a business looks for the most favourable energy contracts that enable them to meet their needs.

An energy procurement manager has in-depth knowledge of the industry and spends several hours studying the market on a daily basis to identify price trends and future availability of different types of energy.

Their role also consists of locating vendors, negotiating prices with suppliers, preparing and managing tenders, maintaining customer relationships and managing records.

Monitoring and reporting

Our team continually monitor and report on excess capacity, reactive power charges, kWh fluctuations, VAT issues and mid-contract changes to legislation on behalf of our clients.

On top of this, we produce a Market Intelligence report, monthly insight into all the energy market trends, whilst our bespoke portal, EM-Powered, is another invaluable tool.

This has an in-built early warning system which allows us to protect customers from breaching their contracted and excess capacity levels,  thus avoiding financial penalties.

Change of tenancy/expansion

By changing premises or increasing the energy supply to your existing site, due to business growth, can often be complicated and require a large amount of paperwork.

Energy Management deals with all aspects of the network in an efficient manner in order to find out the timescale involved and the best solution for your business.

Here at Energy Management, we pride ourselves on our capability to manage situations in the best way possible for our client to ensure you are not caught out by a change in circumstances.

Budget management

With over 200 years of combined expertise in the energy industry, our team is highly skilled at providing in-depth analysis of a company’s current and predicted energy usage, supply costs and existing or pending government energy efficiency “taxation” schemes.

Invoice validation

Customers often pay over 5% more than they should for their energy through undiscovered errors on their energy bill. Our invoice checking system is very thorough and shines a light on errors, whether this is down to inaccurate meter readings, wrongly applied correction and volume factors or CCL and VAT charges.

We regularly publish articles and market news on the procuring of business energy and, as energy consultants, we offer our clients market-leading insights.

To discuss further with an energy procurement manager, please contact us on email: sales@energymanagementltd.com or tel: 01225-867722

Introducing the Choice Energy Framework

Buying energy has become far from straightforward in recent years, due to the increased complexity and volatility of the energy markets.

However, the negotiating skills of our energy consultants and the outstanding relationships we enjoy with energy suppliers enable us to minimise costs on your behalf, through our energy procurement offering.

For public sector organisations with increasingly tight budgets, reducing energy spend is top priority. As such, we have signed a framework agreement that will allow public sector organisations to access the best energy solutions for their business, called the Choice Energy Framework (CEF).

Using our experience as a leading energy consultancy, Energy Management has put together a shortlist of four energy suppliers.

Each supplier will be invited to offer various contracts of 12, 24, 36 and 48 months.

The four suppliers have been shortlisted for the following reasons: tariff competitiveness, billing accuracy, max/min volume threshold restrictions and terms and conditions.

The right time, price and product

Crucial factors in the purchasing decision are the length, type and timing of energy contracts.

Our market intelligence reports and analysis allows us to look at both long and short-term trends in the energy market and produce a tailor-made solution for your organisation. This could be a full flex, mid-flex or fixed-price agreement which gives you either greater security or allows fluctuating energy prices to work to your advantage.

“Energy Management’s accurate forecasting and measured and sensible advice on buying in the wholesale market has eased supply changes and negotiated the most favourable tariffs possible for us.” – David English, Commercial Director at Restore Records Management.

What are the benefits of the Choice Energy Framework?

  • An increase in buying power equals reduced costs, due to the capped £1.5bn framework and supplier prices with margins reflecting the high volumes of energy used by the public sector.
  • OJEU tendering will be made simple for you. This is down to CEF being fully OJEU compliant, meaning your organisation by-passes the lengthy process, producing savings up to £20,000.
  • It offers a total approach to energy management, this is down to us taking care of your invoice validation, budget management, risk management as well as assisting with legislation and compliance after successful procurement of a contract.

For more information in regards to public procurement and the CEF, please contact us by email: sales@energymanagementltd.com or phone: 01225 867722 / www.energymanagementltd.com

We are also attending the Public Sector FM (Financial Management) event at the Ricoh Arena in Coventry, on 12 November. Come and visit us on stand FM12!