How can commercial businesses benefit from establishing an energy procurement strategy?29 September 2022
Are you debating an energy procurement strategy for your business? Some of our readers shared the benefits businesses can reap from establishing an energy procurement strategy. Keep reading to see if those benefits align with your goals for your own business.
Kelly Bedrich, CEO, ElectrictyPlans.com.
Budgeting, risk avoidance, and sustainability strategy
Commercial businesses can benefit from establishing an energy procurement strategy in three ways: budgeting, risk avoidance, and sustainability strategy.
From a budgeting perspective, having a procurement strategy and buying energy purposefully lets you plan ahead. You can lock in a fixed-rate electricity plan that allows you to budget effectively. Fixed-rate plans are a hedge against inflation.
Many small business owners opt for a procurement strategy to avoid risk. That’s especially true if you’re in a market where utility is an option. You can stay with the standard service offer with the utility and be a rate taker.
You’ll pay for the utility’s procurement costs and strategy and never know where your rate will go next. Or you can decide to shop for an alternative supplier and lock in a rate that avoids the ups and down of utility rate cases. If you’re in a market like Texas, where the utility is not an option, having a procurement strategy means you are purchasing power on a schedule, and evaluating your options regularly.
You avoid the risk of a variable rate, or if you decide on a variable rate product, you know the ups and downs associated with that choice.
Having an energy procurement strategy can also tie into your company’s sustainability strategy. More than just a buzzword, sustainability means a company operates in a way that does no damage to the environment.
In your energy procurement, you can choose to support energy suppliers with a lower carbon footprint, such as those that only purchase power from clean-burning natural gas. Or you can choose to offset your electricity purchase with RECs and renewable energy certificates. You also have the option to buy green energy through a power purchasing agreement with a wind or solar facility.
You can go it alone on your energy procurement strategy, but many small and medium business owners don’t have the resources to devote to this task. That’s why they use an energy broker to help monitor the energy markets, review contracts, and assess pricing.
This is a crowdsourced article. Contributors’ statements do not necessarily reflect the opinion of this website, other people, businesses, or other contributors.
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