In the current environment, businesses should be looking to both manage energy demand, consider energy procurement strategies that provide flexibility in their purchasing and related costs as the market continues to change, and look closely at supply alternatives.
Here are five key considerations that all businesses should keep in mind:
1. Making the market – having retailers bid for business
When businesses are looking to secure a new contract for energy, they can do far more than simply contact a few retailers. We can maximise competitive tension for our clients by conducting an online ‘reverse auction’ on our Australian Energy Exchange (AEX), where sophisticated software facilitates bids from a broad range of retailers based on the user’s pre-loaded information, desired load and contract terms.
With greater competitive tension between energy retailers built into this process, the result can be lower energy prices or more favourable terms, and users can monitor the process in real-time.
2. Flexibility through progressive purchasing
If your business is a higher volume energy user, rather than having to enter into a fixed contract over 2 or more years, you can partner with accredited advisers to buy progressively in blocks under a structured purchasing arrangement. This provides greater flexibility and manage risk as you can respond and block purchase in a declining price market, which we are now experiencing, as well as respond quickly should prices rise.
3. Monitor electricity usage
An increasing number of businesses are realising the need to monitor their electricity usage in order to proactively control and minimise their energy costs and usage. We firmly believe that you can’t control what you don’t measure and have created our Energy Metrics offer to help our clients take control of the way they manage their electricity consumption.
Our team can help you save money by validating your bill against your consumption to make sure you are only charged for electricity you use. Network Tariffs (or charges) can make up almost half of your electricity bill so we also review your network tariffs annually to make sure you are on the most cost effective tariff for your business.
4. Matching supply and demand
We are seeing an increasing trend towards businesses better managing their energy demand to reduce costs. Through leveraging solar, battery storage, demand/response agreements and ongoing energy management, users can take greater control of their usage.
Solar can also provide an opportunity to either generate energy for immediate consumption, stored through battery technology or can be sold into the grid. To ensure that you get the best solar solution we recommend a Solar Viability Assessment.
5. Rising demand for renewable Power Purchase Agreements (PPA)
We have seen demand continue to increase for renewable PPAs either behind the meter or on the grid, whereby a contract is entered between the user and generator at a pre-agreed price and term, typically between 8 and 15 years.
These agreements provide longer-term price certainty and support renewables projects such as solar and wind. Before the meter agreements, known as Synthetic PPAs, act as a contract for difference between the user and generator which is settled between an agreed strike price and the NEM spot price.
These are just some of the strategies being used or developed by savvy energy users, and we expect will likely continue to grow in importance as pricing remains high.