There are numerous actions a business can take to reduce energy costs and lower carbon emissions. Energy management Services plays a key role but it’s also important not to overlook the other end of the process – the steps you take before that precious energy even reaches you; that is, the deal you sign up to and the way you manage energy purchasing.
To do this thoroughly and professionally requires a fully integrated energy strategy that includes the energy purchasing cycle.
Unfortunately, this is often overlooked – sometimes because such measures as incorporating energy management products are more tangible, but often because buying energy cost-effectively is complicated.
There are numerous variables, enormous volatility in prices and an endless array of contract options. But while this may be daunting, getting it right can deliver major savings and significant competitive advantages.
The three aspects of buying gas and electricity that make them different from most other products or services you purchase are the timing of the purchase, your company’s appetite for risk and the skills and knowledge needed to get it right.
Timing
Timing is crucial because market prices fluctuate quickly and massively. Some changes are foreseeable, such as seasonal demand, while others, such as unrest in the Middle East, can sometimes be totally unforeseen and could send energy prices soaring in hours.
Consequently, you must clearly understand markets and the forces driving them and constantly monitor them to both take advantage of opportunities as they arise and avoid being caught flat-footed.
Risk
Different businesses have different appetites for risk and this has a profound influence on energy purchasing. Most contracts are either “fixed term” or “flexible”, the latter giving a degree of control over prices and potentially make savings – but at greater risk.
To find a contract with the right level of risk for your business you need to know the options available.
Skills and knowledge
Finally, if you are responsible for energy procurement you must be familiar with the myriad of different opportunities provided by energy suppliers and negotiate with them to get the best deals.
In all these things, familiarity, experience and industry knowledge are crucial. Energy purchasing has become an increasingly specialist full-time role and an industry of experts has grown up to operate between energy suppliers and business users. Companies like UES Energy constantly monitor market fluctuations and the full spectrum of suppliers’ contracts to help clients find the best options.
Premium airline seating manufacturer Contour Aerospace (now part of Zodiac Aerospace Group), were one company who saw the value in working with energy professionals and following great results from RUMM Energy Management Software on their energy management, turned to UES Energy for advice for their energy purchasing.
Finance Director Alison Baker said: “(UES Energy) approach to energy procurement focuses on avoiding unnecessary cost and their advice on the timing of contract placement is backed up with detailed market intelligence. Their quality of service is reassuring and a stark difference to our previous energy broker.”