If energy procurement is one of the many hats you wear, you know all too well the challenges surrounding this responsibility. With the energy industry continually changing, good energy management is becoming increasingly complex in today’s competitive business environment. Being able to stay on top of shifting energy markets can be tough when energy procurement is just ONE of your responsibilities. Will you take control of energy procurement to drive positive outcomes and help your company meet business and sustainability goals? Or will you settle for the status quo of energy procurement?
Whether energy buying is a significant part of your career responsibilities, or it’s merely one of many hats you wear, there are essentially three ways to approach energy procurement and energy management.
- Receive the standard rate from the utility company.
- Purchase directly from an energy supplier.
- Leverage the expertise of an energy advisor or broker.
If you want to proactively develop a successful energy strategy that you’d be proud to hang your hat on, keep these 4 best practices in mind.
- Know what drives energy markets. Market prices fluctuate daily, rising and falling in response to a host of drivers such as the economy, unexpected weather, regulatory and political events. Longer-term pricing is impacted by energy supply forecasts based on retirements and the development of new power plants, natural gas production, and pipeline delivery capacity. It’s vital that you continuously monitor the market to make good buying decisions. If you’re on top of the market, you can take advantage of market prices that will put your organization in a supply agreement that delivers favorable results for the long term. There are many tools and resources available that can help you research and monitor the energy market.
- Be strategic. Monitoring and managing your organization’s energy consumption as well as its carbon emissions are essential components of smart energy planning. When devising your energy strategy, it is important to first understand how your organization uses energy and whether your current procurement process best meets your company’s energy needs. Next, consider how integrating renewable energy into your overall energy mix may provide cost and sustainability benefits. A holistic energy strategy includes both traditional and renewable energy sources.
- Analyze your data. Energy usage data, as well as utility and supply bill data, can provide significant insight into how your facility uses energy and how your organization is being charged. These insights can help you make more informed budgeting decisions and identify areas for cost improvement. Joining all your data together into a usable format that can assist you in decision-making can be challenging, but this practice will reap countless benefits. You can also demonstrate your energy management successes using this data!
- Understand contract types. Before you move into the next phase of your energy strategy, buying energy, it’s important to understand your renewable energy options as well as commodity purchasing options. From basic, fixed, or index-priced, all-inclusive contracts, to more complex variables such as block and index pricing, managed service, or multi-layer hedging, to integrating clean energy such as wind or solar into your overall strategy, the energy right mix should ultimately support your organization’s business and sustainability goals.
Managing your organization’s energy procurement strategy can be complex, and most people who find themselves in an energy buying role are not energy procurement experts. At Usource, our energy consultants and energy analysts can help you devise a successful energy strategy that helps your organization achieve maximum cost savings and reduced carbon emissions. Contact us to get the conversation started!