What is energy procurement and how does it cut energy costs?

No matter the size of your business, your company relies on power.

Savvy business owners know that having the right electricity contract in place is vital to improving the bottom line. But how can you be sure you’re getting the optimal power deal for your business? Below, we’ll talk you through three ways to approach energy procurement and how each approach can help your business to shrink power costs.

Forward Purchasing

In today’s volatile economic climate, the best way to secure a cost-effective energy contract is to sign on when prices are low. However, many business owners wait to explore pricing options until just before their contract is due for renewal. This doesn’t leave much time to weigh up options and choose the best deal. You can lock in a contract at a lower price in advance of the renewal date of your current contract, and it can mean big savings.

In order to enter the market at the right time, you’ll need to do three things:

Audit your company’s energy usage to find out where savings could best be made in your electricity usage.

Research energy price fluctuations to find the time periods in which the lowest prices are on offer – prices can fluctuate up to 5c/kWh year on year, so doing your homework can save your bottom line.

Plan ahead and explore your options well before your contract is due for renewal to avoid having to accept inflated energy prices. 

Business Energy Tenders

Energy tenders can turn the tables for your company and allow wholesale energy providers to compete for your dollar. Putting out a tender involves two simple steps. First, your company makes a projection of energy expenses for a given period. They, you ask multiple providers for their best quotes. The advantage of going to tender is having a contract that fits your projected budget for that period. Of course, it also gives you the best value for your outlay.

The tender process may not suit every business. However, it can be time-consuming and requires some prior knowledge of energy procurement, the energy market, and its fluctuations. This may be mitigated through the use of a third-party consultant or broker. However, depending on the size of your business, prior research and forward purchasing may better suit your needs. 

Energy Buying Groups

Smaller businesses that may struggle to compete in the tender process, or not have the human resources to spend on energy procurement or researching the power market, may reap the best savings through joining an energy buying group. As the name suggests, an energy buying group comprises a pool of businesses working together to secure an economical power contract as a collective.

While one small business may not have the buying power to command lower power prices, multiple small businesses working together can leverage that power to secure a better deal. 

Networking with similarly sized small businesses in your field and taking a collective approach to power costs may be the key to securing the biggest savings for everyone.

Take the next step to save on energy procurement

If you are interested in having a professional review your energy needs and recommend an electricity contract for you, follow the link below for a FREE energy evaluation from our trusted friends at Leading Edge Energy: www.leadingedgeenergy.com.au/energy-partners/

To take your savings to the next level, give us a call on 1300 768 977 or contact us here to get reliable, abundant, and low-cost solar energy working for you and your business.