One of the many benefits of business energy tenders is that you can project your energy expenses for a given period of time, allowing you to plan budgets and forecast costs and cash flow.
You may often hear business owners say that they have saved a lot of money by “going to tender” on the wholesale market.
But what does it mean? And is it a good fit for your business? In essence, going to tender means putting out a call for offers to the wholesale market for a certain volume of electricity from multiple providers.
Once you sign an offer you effectively lock in the agreed rates for the fixed period of time, shielding your business from the whims and volatility of the market.
It may sound simple on paper, but the business energy tender process is time-consuming and can be confusing if you don’t know the lay of the land.
This is where Leading Edge Energy can help. Our Energy Management Consultants are constantly plugged into the moving energy market.
This allows us to monitor and respond in real-time to present businesses with the best possible bespoke offers.
Our tender process is meticulous and is designed to deliver the most cost-effective and catch-free agreement to our clients.
Some of our happiest clients include Blackwall Property Funds AND Sydney Freezers, both of which benefited substantial energy cost savings of $150,000 and $60,000 per annum respectively as a direct result of our business energy tender process.
Who can issue business energy tenders?
In Australia, businesses are categorised by energy companies as being SME (small to medium-sized enterprises or C&I (Commercial and Industrial).
Commercial and Industrial users are businesses that typically consume more than 100MWh of electricity per annum.
This means that they are able to forward purchase electricity on the wholesale futures market for periods of 12-60 months into the future. By doing so, they are able to lock in prices when the market offers advantageous contracts.
Small market enterprises usually consume less than 100MWh of electricity. SME Bills are bundled and simple, much like residential retail accounts.
Rates are subject to change once a year, reflecting changes in the wholesale market. SME users are not able to access the wholesale electricity market but they are able to tender for retail plans.
However, misclassification is not uncommon, for example, a business using 300MWh pa could be misclassified as a SME.
How will a forward purchasing energy tender help my business?
As we touched upon earlier in this blog, there are many benefits associated with business energy tenders.
Finding the perfect fit
A benefit of issuing business energy tenders is that Leading Edge Energy will receive a wide range of retailer quotes.
Being able to choose from multiple offers will provide you with a clearer picture of rates on the market and give you the confidence to make an informed decision.
A business’ load profile is a variable that can affect the rates offered by retailers. Different retailers can price certain load profiles very competitively compared to what they would normally quote. The only way to find out what offers are out there is to go to tender and see what the market returns with.
Leading Edge Energy will submit the tender offer to the market on your behalf. We also scrutinise the terms and conditions of offers in great detail to ensure that the agreement is tailored to your business’ needs.
Getting in at the right time (and the right price)
Here at Leading Edge, we believe that market timing is key when electricity contracting. We know when to take advantage of seasonal, predictable, and unpredicted dips in price.
If you were to go to tender close to when your current deal is due to expire, you leave yourself at risk of having to renew at whatever prices the market is at with a very short deadline to renew approaching.
During the COVID lockdowns, we identified some fantastic deals for clients because prices were so low at the time. We secured a peak and shoulder electricity rate under 5c/kWh for Plastic Forests, to make $26,000 per annum saving.
When your business puts out a call for energy tenders, the offers that come back specify exactly how much your business will pay for a set amount of electricity for a fixed period of 12, 24 or 36 months.
Even if prices go up astronomically, your business will pay the agreed price. This will help you budget for the long-term with certainty that no shocks lie around the corner. This will also help your cash flow management.
You can secure a new deal while your current one is active
You do not need to be out of contract to sign a new energy deal. In fact, we encourage businesses to do the very opposite.
By searching for a wholesale market deal well in advance, you can avail yourself of the best possible offers that are made.
Leading Edge Energy will monitor offers that are made to your business in real-time.
Tender offers are often time-sensitive, requiring acceptance within generally 2-4 business days.
However retailers have the right to rescind offers whenever they like, This can happen when electricity prices unexpectedly shoot up and retailers will rescind.
As your energy broker, we will scrutinise these offers and draft an in-depth report accurately comparing them within the short time frame available.
Do you need help to identify the best deals?
If you would like us to issue a business energy tender on your behalf, simply fill out our Letter of Authorisation webform.
This simply gives us the authority to request quotes on your behalf.
You are not obligated to accept any of the offers we present and you are charged nothing regardless of the decision.
If you want to chat about your options in further detail, call us today for a free consultation with one of our Energy Management Consultants on 1300-852-770.
You can also drop us an email at email@example.com and we’ll get in touch with you.