This guide offers an overview of the energy procurement process and principles for best practice. Energy procurement is a complex process and the outputs of this activity directly influence the cost of energy to the organisation, hence a critical activity that needs to be managed appropriately.
We all want to know what the best procurement strategy is for the organisation. However, the focus is usually on energy price when the truth is that unless one is consistently buying daily spot prices over a period of time, a best price is near impossible to achieve.
Energy purchasing is not just about price.
It’s about getting the best fit for the organisation, one that not only delivers value but also fits within and supports the company’s strategy and risk management requirements.
Also, negotiating the right contractual terms and knowing how to optimise all the inputs into the procurement process is key.
The planning process should focus on gathering and assessing information to feed into development of a suitable purchasing strategy and to form a concise instruction for energy suppliers. The degree to which planning takes place, is largely relative to company requirements, and likely to increase proportionately to the energy expenditure.
Planning is beneficial because it;
- Helps ensure one is buying at the right time,
- buying in the right way,
- offers clear pricing instruction to suppliers,
- allows time to investigate or negotiate offers,
- and allows time to track the market
The planning process should evaluate any relevant internal company information, the organisations budget requirements, any legislation or policy requirements and supply and consumption information.