fbpx

What is Commercial Energy Procurement?

What is Commercial Energy Procurement?

Securing new commercial energy contracts that match your budget and site specific requirements can be a difficult task, especially if you’re having to squeeze this in alongside your day job and don’t necessarily have the time, resource and expertise of how the energy markets work. But, it doesn’t have to be a head-ache. With our commercial energy procurement support services, you can sit back and relax knowing that we have it under control and are prioritising your best interests.

So, what is commercial energy procurement? Commercial energy procurement is the process of purchasing energy (gas and electricity) on behalf of a business or other commercial entity. Specialist energy procurement consultants like Boxfish, source the right energy deals for their customers based on usage, sustainability and other factors, and act as an extension of your team throughout the whole process. 

Read on to learn more about energy procurement services and how the process works with Boxfish.

What is Business Energy Procurement?

Business energy procurement is the process of purchasing energy on behalf of a commercial user. Procurement companies ensure that the individual needs of their customers are met and are procured at the best value rates.

Many businesses don’t have the time, resources or expertise to scour the market and decipher complex information to find the right energy deals for their needs. A commercial energy procurement company can do this more efficiently, more effectively and at a lower cost. What’s more, it frees your resources up to focus on their day job.

Typically, energy procurement consultants work in partnership with commercial users to develop an end-to-end strategy for their energy usage needs. This may involve analysing current usage, contract tendering, identifying how best to improve consumption efficiency, looking at value add opportunities and advising on a range of legislative and environmental factors, all designed to minimise costs and carbon, ensure you remain compliant and help deliver a sustainable future.

Benefits of Using Energy Procurement Services

There are  a number of benefits to using energy procurement services like ours at Boxfish. Here are just a few of the top benefits:

Reduced Energy Costs

Agreeing to the wrong energy contract or buying at the wrong time can be incredibly expensive. There may also be a number of hidden fees that creep up on you or fluctuating costs based on demand. But it needn’t be that way. A commercial energy procurement company expertly navigates the market and ensures that you receive the energy you need at the best possible price.

Efficiency and Sustainability

Not only will energy procurement services help you to source cost-effective energy for now, they’ll also forecast what you need for the future. This ensures operational efficiency and assists with planning future budgets. It can also encourage sustainability in that you only procure what you need.

Peace of Mind

Using an energy procurement company gives you peace of mind that your chosen energy plan is the right solution for your business and will cover all your needs in a cost-effective and environmentally friendly manner. You can rely on their expert advice and rest easy knowing that everything is under control.

How Does Energy Procurement Work?

Energy procurement companies use a wealth of knowledge and industry experience to source the right energy contracts for their clients. Approaches may differ slightly from company to company but may include:

  • Procurement of gas and electricity supplies
  • Support to procure either fixed or flex contract options
  • OJEU-compliant procurements and utility supply frameworks.
  • Non-tariff optimisation support to streamline the additional charges that make up your energy costs e.g. capacity charges, reactive power charges, etc.
  • Ongoing utility management services such as bill validation, supplier management and query resolution support

The procurement stage itself, may use a similar process to the following;

Internal Analysis

Procurement companies will first analyse current energy usage via bills and other documentation. They may also take into account other factors such as operational efficiency and sustainability.

Vendor Selection

The internal analysis provides procurement companies with all the relevant information they need to select a range of appropriate vendors to choose from. During this process the procurement company will consider many factors such as the vendor’s:

  • Price competitiveness
  • Ability to support the client’s sector e.g. charities, hospitality, industrial etc.
  • Scale to provide the required volumes of energy
  • Stability – can we be sure they’ll remain trading over the duration of the deal? 
  • Invoice format and content
  • Contract terms and conditions
  • Value added services

It’s important to note that, if you choose to work with a third party to manage the procurement process, they must be able to show a competitive tender process across as wide a selection of vendors as possible. Unfortunately, too many rogue brokers have preferential arrangements with a single vendor that encourages them to place all their contracts with that supplier, typically for an inflated commission. This creates a clear conflict of interest – are they guaranteeing the best contract for your business (lowest costs, best customer services, greenest energy etc.) or for theirs (highest possible commission payments)? 

Analysis & Recommendations

A reputable procurement consultant will not only go out to the full market but they’ll also help analyse and simplify the offers, ideally presenting the data from each offer in an easy to digest, like for like format. 

This approach provides complete transparency on the offers and enables the client to make an informed decision. 

And retaining the ability to make an informed decision is another point that you need to keep in mind, as the final decision should always rest with you. Too many rogue brokers force their clients into a single option (typically the one that’s best for them but not necessarily best for the client) or get permission to sign contracts on your behalf. While that might sound like they’re taking the pain out of the process and making life simply, it’s a very common red flag that there’s a conflict of interest at play.

 

Purchase Order

Once the client has made an informed decision, the procurement company will then finalise the contract paperwork and arrange for sign-off. After the sale, the company may offer further services such as support to manage the transfer to the new supplier, ongoing bill validation, ad-hoc assistance on the day to day management of the contract etc..

How Do You Create A Sustainable Energy Procurement Strategy?

As previously mentioned, as part of the energy procurement process, sustainability can be factored in. This applies whether sustainability is currently a priority in your energy management or not. It also isn’t a one-size-fits-all approach as sustainability means different things to different people and will also depend on your business operations. 

If sustainability is a key factor for your business, your energy procurement provider will factor the following into the process:

  • During the internal analysis stage, they will conduct more in-depth analysis of your energy consumption. This includes what energy you use and where in the business it is used. This will provide insight into where sustainable changes can be made.
  • Renewable energy sources – during vendor selection, your procurement company may consider renewable energy providers.
  • Alignment with company operations, structure and decision making – whatever energy plan is selected, it must align with the company’s core requirements. It’s not sustainable if it doesn’t work.

What are Good Sustainable Energy Procurement Practices?

Sustainable procurement reaches every corner of your supply chain, from the energy used in your office or warehouse to the fuel used in company vehicles. It can even help to determine how sustainable your suppliers are. A few great examples of sustainable energy procurement practices include:

  • Sourcing utilities from renewable sources, e.g. solar or wind power.
  • Switching to more efficient technologies, such as LED lighting.
  • When it’s time to procure new company vehicles, switch to electric vehicles (EV) or ultra low-emission vehicles (ULEV).

Commercial Energy Procurement Services at Boxfish

At Boxfish, we understand that sustainable energy procurement can be a complex and difficult field to navigate, especially if you’re not an expert and are already pressed for time. But that’s where we come in. Boxfish offers an incomparable energy procurement service that is designed to reduce the time and cost associated with managing all your energy needs. Learn more about our service online, or get in touch for a consultation.

GET STARTED FOR FREE

Fill in the form or call us on 0141 226 8525 to get your free, no-obligation review.

  • This field is for validation purposes and should be left unchanged.