The energy market has evolved significantly over the last decade, and one of the major changes that have occurred is the introduction of flexible energy buying. This approach to energy procurement has been a game-changer for businesses of all sizes, offering them the ability to purchase energy in a way that better suits their individual needs.
Flexible energy buying essentially allows businesses to take more control over their energy procurement strategy by providing them with a range of different buying options and the ability to tailor their purchasing to their specific requirements. In this article, we’ll take a closer look at the concept of flexible energy buying, how it works, and the benefits it offers.
What is Flexible Energy Buying?
Flexible energy buying is a procurement approach that offers businesses the ability to purchase energy on a more flexible basis. Rather than being tied into fixed-term contracts, businesses can instead take advantage of different purchasing options to better align their energy procurement strategy with their operational needs.
The three most common types of flexible purchasing include:
Spot Purchasing: Spot purchasing is where energy is purchased on a day-to-day basis, with prices determined by market fluctuations. This approach can be beneficial for businesses that require a high degree of flexibility and don’t want to be tied into long-term contracts.
Forward Purchasing: Forward purchasing involves purchasing energy for delivery at a later date. This approach can help businesses to mitigate the risks associated with volatile energy prices, as they can lock in prices in advance.
Flexible Purchasing: Flexible purchasing involves purchasing energy in smaller volumes, over shorter time periods, and at different times of the day. This approach can help businesses to better manage their energy costs by purchasing energy when prices are lower.
How Does Flexible Energy Buying Work?
Flexible energy buying is typically carried out through an energy broker like ourselves who will work with a business to understand their specific requirements. The broker will then use their market expertise to identify the best purchasing options for the business based on their needs and budget.
Once the purchasing options have been identified, the business can choose the option that best suits their needs. For example, if the business requires a high degree of flexibility, they may opt for spot purchasing, whereas if they want to lock in prices in advance, they may opt for forward purchasing.
Why is Flexible Energy Buying a Good Consideration?
There are 4 key benefits that flexible energy buying offers:
- Cost Savings
Taking advantage of market fluctuations and purchasing energy when prices are lower.
- Increased Control
Businesses can align their purchasing with their operational needs.
- Risk Mitigation
By using forward purchasing, businesses can mitigate the risk of sudden price spikes, and forecast with more confidence
Buying energy at times when the energy mix is cleaner.
Flexible Energy Buying – In Summary
Flexible energy buying has revolutionised the way businesses purchase energy, In a world of uncertainty it isn’t always right to fix in a long term contract. Businesses often cling onto a fixed rate as a security blanket – ‘it might not be a good rate but at least you know where you stand’.
By working with an expert energy broker, business can take advantage of different purchasing options outside of fixed contracts, enabling them to capitalise on cost efficiencies that occur through a more flexible approach.