Traditional energy buying baskets have asked participants to take a leap of faith on the promise that combining with others to leverage the buying power of a larger consumption will offer a better price than purchasing individually.
The traditional approach is to sign up to the basket and hand all the buying decisions to a central provider who acts in the best interests of the whole collective. Typically, participants will not be able to opt out of the scheme and will not know what they will pay for their energy until they are notified of the closing price.
In addition, baskets have often relied on ‘flexible’ purchasing strategies, meaning that multiple buying points exist throughout the period of the contract with hedging strategies employed to try to maximise the price outcome for the participants. In theory, flexible purchasing seems like a great idea, there are natural ups and downs in the market that can be exploited with clever buying. However, in a market which is becoming increasingly volatile, this form of energy buying is risky. Sudden spikes in the market and significant increases in wholesale prices have left some buying groups subject to hefty increases. In any case, if you are considering joining any flexible buying basket you should always be clear as to what level of exposure your contracted supply is subject.
What if there were a different way to leverage the power of bulk buying without the risk involved in flexible purchasing?
Power Direct Ltd’s group buying option is not like many other similar mechanisms available on the market. It delivers many of the benefits of bulk buying offered in a traditional buying basket, but with the additional benefit of low risk.
The two-year fully fixed and inclusive contract offered gives budget certainty that the price a business pays for its energy will remain stable for the duration of the contract.
Participants can be confident that they will achieve a competitive price, because their site(s) will be priced individually too, and should the price for any business be better outside of the group, they will automatically be opted out.
In addition, businesses can maintain control throughout the contracting process because they are given the option to leave the process, even after prices have been shared. This is a key advantage for businesses that need to demonstrate due diligence to their shareholders and/or board.
The Gloucestershire Hospitals NHS Foundation Trust’s Head of Estates and Facilities, Kevin Adams, says: “We joined the Power Direct buying group because there was nothing to lose! It enables us to maintain control of our energy contracts, while leveraging the benefits of bulk purchasing to gain competitive prices.”
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