When energy costs seem to be accounting for a growing proportion of your bottom line, how can you contain your costs?

Use the right energy buying strategy

The energy buying strategy you select can affect the price you pay for your energy. But for some, the product choice can seem endless and it can be difficult to compare the future costs of your energy.

For many businesses, a fixed price fixed term contract is attractive because it gives budget certainty. Essentially, you will know what you are going to pay, and for how long.

Some large consumers have more procurement options at their disposal. For example, buying energy on a more flexible basis means that they may be able to benefit from fluctuation in the energy wholesale markets. However, this method reduces certainty and increases risk, because you will not know what you are paying.

One way in which businesses of any size can get a price advantage without exposing themselves to more risk is to pool multiple sites together to procure as a group. If your business doesn’t have multiple sites (or even if it does), mechanisms like energy buying baskets can enable you to leverage economies of scale by grouping together with other businesses to purchase your energy. Energy prices in a buying basket will usually be lower because suppliers are competing for the overall business of the group’s collective energy consumption.

The Power Direct Ltd basket allows each participant to have their site(s) priced individually too, which means all risk is removed – if a business’s price is better outside of the basket, it will be opted out.

The Gloucestershire Care Services NHS Trust’s Head of Estates and Facilities, Kevin Adams, says: “We joined the Power Direct Ltd buying basket 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.”

Contact our energy experts if you would like an informal discussion about how we can help you on your journey towards smarter business energy: 0333 1234 313.


Further reading:
Guide to energy buying strategies
About our buying basket

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