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4 Tips That Will Help You Ace Energy Procurement

Mar 20, 2018

Prices in the energy sector are highly volatile, which makes formulating procurement strategies a difficult task for companies. The energy sector is a broad market consisting of different subsectors. While the range of activities in the energy sector is broad, two distinct features set the energy sector apart from other industries: First, the world’s energy requirements are on the rise and are expected to continue so for a long time to come. Secondly, the growing need for renewable and clean sources of energy has resulted in new regulations and statutory emission requirements to regulate the supply of power from renewable sources. The changing economic landscape has seen many projects being restructured, downsized, suspended, or abandoned altogether. While the energy sector is far from immune from the effect of economic pressures, it benefits from a series of factors, which means that its expansion and further development is assured. Here are four tips for companies to better manage their energy procurement strategies:

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Set the goal

Due to the uncertainties in the energy sector, it is vital that for companies to set the goals of procurement strategy well in advance. Since every business is unique, either due to their tolerance for risk or the budget they have available,  it is essential to tailor the strategy to fit the requirements of each organization. Throughout the procurement stages, these targets can then be referred back to for any clarification.

Market comparison

Though in most businesses loyalty is rewarded by suppliers, it is not the case in the energy sector. Therefore, when it comes to the energy sector, comparing the markets is often the best approach. Also, to avoid increased prices when re-signing contacts with a current supplier, it is advisable to check what other suppliers are offering before making the deal.  Undertaking price comparisons while creating energy procurement strategies will help companies get a broader picture of the market.

Flexible contracts

Though fixed energy contracts can offer several benefits for companies, such as avoiding risk as prices fluctuate, ease of management, and a fixed rate for a fixed contract period, many companies are now turning to a more flexible approach. Flexible price contracts offer businesses a method of procuring energy that helps them to keep them on top of market movements and eliminates the risk of fixing the price during a peak point in the market. Wholesale power can be purchased in smaller amounts, throughout the period of the contract, allowing companies to buy energy at the best times and take advantage of favorable market prices.

Analyze data

It is imperative for every company to have clear-cut data on the energy consumed by them before formulating procurement strategies. This will help businesses gain better insights on the type of energy contract that they require. Companies can resort to energy management software that can help them to monitor consumption patterns and identify potential areas for savings. By analyzing energy consumption data, businesses can also keep track of overconsumption and take corrective action to rectify this.


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