Energy procurement is the process of finding the best energy provider for your business. The process of getting the best possible contracts to meet your electricity and gas demands is streamlined through energy procurement and it also keeps into account future developments in the energy sector. In the future renewable energy suppliers will be the main players in the energy sector so future energy procurement will revolve around them.
Achieving Sustainability:
As a business owner, you have to keep in mind multiple things when you have a plan to execute. The energy bill of your organization is one such thing.
The first thing you will have to take care of is your local utility provider. The local utility provider is your default provider and charges more than other wholesale suppliers. The local utility provider’s rates fluctuate every month and you can become a victim of a sudden price increase by them. They are also known for dictating terms to business enterprises. So the first step would be to get off of their grid.
The next step is to get a contract that fulfills your energy requirement. The types of contracts available are:
Fixed Contracts:
These contracts provide fixed rates for the long term or short term. The rates are not affected by market fluctuations and the per kilowatt-hour rate remains the same. They provide certainty to business owners and also help them to keep their financial goals in check. The risk is that you sign a contract when the market rates are high and later on the prices decrease and you remain stuck with the higher prices
Indexed Contracts:
They lie on the opposite spectrum of fixed contracts because they provide the always changing market rates and are a better option than fixed contracts. The indexed prices fluctuate but they can see a huge blowout if demand increases suddenly or if a catastrophe strikes. These contracts make businesses vulnerable to market volatility.
Blocked and Index Contracts:
These contracts have both block periods and indexed periods. Fixed or block periods in the contracts are placed to get the maximum benefit when the prices are highly volatile to guarantee certainty. The indexed pricing is applied around the block period. Some suppliers apply a limit to the amount of load available in the block period.
Why Procurement Is Important
Energy procurement provides certainty to your financial forecasts because it is important to plan when running a business. It also provides a detailed outlook of your electricity load and the monthly usage report.
It also ensures that you get the most reliable contract. Such a contract will get you an uninterrupted supply of energy, 24/7 customer support, and flexibility.
You will also have full control over your energy cost and get financing and billing schedules.
If you are considering hiring an energy procurement firm you can have a look at the services provided by Utility Bidder. They will give you unbiased advice regarding what you should do and how to execute the shift without any difficulties.
