Energy Procurement 101 – How to purchase electricity for your business

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Australia’s Energy Market is a complex place and it is easy to get lost in the details, but our Energy Procurement 101 blog series is designed to help you understand the intricacies of it all.

Electricity is the lifeblood of every business, but it can also cause you to hemorrhage thousands of dollars if you do not get the purchasing process right. But what exactly does this entail? There are three main steps to follow, namely:

  1. Market timing and forward purchasing
  2. Business energy tenders
  3. Energy buying groups

Market timing and forward purchasing

The top trump tip for electricity procurement is that market timing is key. If you want to secure advantageous deals for your business, you must enter the market at the right time. 

You want to make sure that you enter into a contract when prices are favourable. 

This is essential. If you leave your energy contract till the last minute, you may be forced to purchase energy at inflated prices.

If you begin to explore your options way in advance, you will be able to play the market and find the best deals for forward purchasing. 

Business energy tenders

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.

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 tenders process is time-consuming and can be confusing if you don’t know the lay of the land.

Energy buying groups

If you are running a small business, energy buying groups are a great way to secure fantastic rates by leveraging the power of many.

Small businesses with a small load and consumption may struggle to attract advantageous offers from retailers.

But if you pool your purchasing power into a group made up of similar businesses, you can make great savings. 

Our electricity buying groups blog post outlines how we pool similar businesses such as pubs or schools into different buckets and issue group tenders.

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