Our Energy Trading specialists provide Energy Action’s corporate clients with quarterly recommendations and offer transactional services. We also extend progressive purchasing to include Renewable Energy Certificates. Our advisory is based on predictive modelling, market research and extensive industry experience. We can develop a certificate purchasing strategy which includes voluntary certificate surrenders to achieve an organisation’s sustainability objectives. Some of the factors that determine wholesale electricity prices (and environmental certificate pricing) include:

• weather conditions that influence the demand for electricity
• renewable generation projects which influence the supply of electricity
• asset availability such as generation, transmission and distribution
• government policy and market regulation, particularly relating to renewable electricity targets and compliance percentages
• economic activity reflecting the demand for Australian manufactured goods
• international energy commodity prices that influence coal and gas
• resource developments that influences new sources of energy supply
• financial markets that influence investor returns

Given the complexity around energy pricing, it makes sense to draw on expert advice from Energy Action when making progressive purchasing decisions.

 

 

According to Energy Action’s Head of Trading and Pricing, Scott Easton, progressive procurement is particularly effective in reducing electricity purchase costs in a declining market. We work with our customers to establish controls, risk preferences, governance and cost objectives.

Current market conditions are ideal for progressive purchasing due to the price backwardation that has emerged since November 2019.


                            

                            

                            

                             

This can be seen from the Electricity Futures charts which show the wholesale price of electricity by NEM states (states excluding WA and NT). Since November last year, progressive customers have been taking advantage of the significant decrease in electricity prices, which our fixed contract customers are not able to realise because their rates have been locked in.

Progressive purchasing has been designed as a retail product that eliminates exposure to spot prices. It is not a derivative product so corporates don’t need to change their accounting treatments or disclosure requirements as a result of selecting a progressive purchasing product.

 

 

Progressive purchasing is not for every corporate. Some organisations require budget certainty, don’t have adequate risk management control or are unable to manage variable price contracts. It is also essential that our clients have appropriate delegations of authority in place to respond to lower priced periods in a timely manner. This allows our clients to spread timing risk and average costs over time. Progressive purchasing works best for single corporate entities using more than 10GWh per year.

The current market conditions now provide our clients with an opportunity to secure year-on-year cost reductions and the option to purchase all or part year for 2022 and 2023 contract years.

Energy Action has demonstrated to our corporate clients the value creation from progressive purchasing. Our large electricity users, who applied our purchasing recommendations, have effectively outperformed alternative purchasing methods. Our results show progressive procurement is a proven approach to risk optimisation capable of delivering lower overall purchase costs.

 

Our clients’ requirements differ between energy cost objectives, risk exposure policies and understanding of the electricity market. 

Whether a structured procurement approach or fixed price contract is most suited, Energy Action’s service offering will guide you through the selection process. Our advisory is market leading. We use a combination of predictive modelling and applied technical analytics as well as market fundamentals to provide our client recommendations. We also offer transactional services and can purchase under instruction, on our client’s behalf. Our fee structure consists of a monthly retainer to avoid all conflict of interest. We do not add commissions or transactional fees to our progressive purchases nor do we receive payments from energy retailers to place a contract. Our transactional services are transferred to our clients at cost to ensure our incentive is to act in the interest of our customers.

Yes. We can develop a certificate purchasing strategy which includes voluntary certificate surrenders to achieve an organisation’s sustainability objectives.