How can my company obtain energy?

Your business should search for energy suppliers that offer competitive pricing and solutions that meet your specific needs when looking to purchase energy. There are many industries that have specific requirements regarding energy consumption. Partnering with the right supplier will ensure greater efficiency.

What is energy procurement?

Energy procurement refers to the strategic process of procuring your energy needs from a local distribution company (LDC) or third-party energy supplier.

What are the advantages of energy procurement?

Energy sector procurement has many benefits: lower risks of unexpected charges, hidden fees and costs, better load forecasting, reliable fuel sources, and control over fuel types and costs.

Businesses must source electricity or natural gas to power their operations. Energy procurement refers to the strategic process of procuring your energy needs from a local distribution company (LDC) or third-party energy supplier.

Although it sounds easy, there are many aspects to energy procurement that are not obvious, especially given the current world events. Electricity prices are still recovering from the COVID-19 pandemic. Renewable energy is now the dominant force, displacing fossil fuels in the background. This means that energy procurement in the future will be dominated by renewable sources such as wind, solar and hydrogen. How can you make the best decisions for your company? This article will explain all aspects of energy procurement and its benefits.

How do companies procure energy?

Your business should search for an energy supplier that offers competitive pricing and provides a solution that suits your specific needs when looking to purchase energy. There are many industries that have specific requirements regarding energy consumption. It is important to find the right supplier so you can get the best results. People don’t realize that they have the option of where to purchase natural gas or electricity. It all depends on their state. It is possible to save money by choosing the right vendor.

Shopping for an energy provider in such deregulated states is similar to shopping for any other service provider. These are the parties you will be dealing with during the shopping process:

  1. The supplier: These are private, wholesale and retail energy companies that provide energy to customers. They are an alternative to utility companies pricing and buy energy directly from the market. Expect them to offer competitively-priced, personalized energy solutions.
  2. The broker: Consultants or energy brokers bring buyers and sellers together. They will work closely with your energy procurement manager to help you develop a solid procurement strategy. With your best interests in mind, the broker or consultant will work with suppliers to help you achieve these initiatives. You don’t have to work with a broker, consultant or agent. If you wish, you can also work directly with the supplier.
  3. The utility company – The utility or LDC is your default supplier. If you do not choose to do anything, your local utility will provide you with both supply and distribution. While utilities don’t have any preference over whether you are working with them for supply or a supplier, some utilities try to encourage end users in one way or the other. Utility supply charges a fixed rate, typically 3 to 6 months, for a period of time. Or a market-based rate that changes each month.

Why energy procurement is important:

The right strategy for energy procurement can help you save money. It will allow you to control your energy spend and not let the utility company. Some utilities offer customers the opportunity to get discounts if they leave. Suppliers will be able to consolidate all your accounts and meters onto one invoice. This makes it easy for your accounts payable team.

A well-planned strategy for energy procurement can increase the reliability and certainty of your operations.

  • Reduce the chance of unexpected charges, hidden fees, or other costs.
  • Your broker/consultant/supplier will send you monthly usage reports and research to help you make more informed load forecasting.
  • It is essential that industries such as construction, transport, and healthcare have a reliable source of fuel.
  • This will allow you to take control of your fuel costs, types, financing, and billing schedules.

Is your company able to use an energy procurement service?

Since all businesses have overhead energy costs, energy procurement services are beneficial to almost any type of business. Utility procurement companies can help you manage your energy spending. It is also possible to get green energy quickly, as it is becoming a common practice. Listed below are some examples of businesses that could benefit from an energy management service:

  • Non-Profits
  • Organisations for industrial and commercial purposes
  • Governments
  • Schools

It is difficult and time-consuming to understand and manage all aspects of energy procurement. However, it is essential for strategic energy purchases. Your energy procurement strategy must be aligned with facility operations. Your energy rate consultant should know how to structure contracts to optimize demand supply.