Flexible Purchasing – Is it Right for Your Business?
If you were responsible for arranging commercial energy supply contracts in recent years, you will inevitably have been exposed to the challenges brought about by volatile energy prices. As world energy markets have become increasingly interconnected, uncertainty about future energy prices has grown. This creates a challenge for energy buyers who have to make choices about when to fix energy prices. This single issue has by far the greatest impact on your energy costs.
Flexible buying is one way to address this challenge.
The Scope of the Challenge
Under traditional fixed price energy supply contracts, the buyer decides when to fix a price in advance of the start of the contract supply period and agrees this price with the chosen supplier. The specific day when this happens plays a huge part in the final cost that a buyer pays. This presents a massive challenge – "On which day should you buy?"
In the period September 2021 – May 2022, energy prices rose dramatically, largely driven by the war in Ukraine but we also saw dramatic falls within that period, creating buying opportunities. The difference in costs that this volatility creates for end users can be several pence per kWh, which equates to thousands, tens of thousands or even hundreds of thousands of pounds per annum.
The Solution
In essence flexible purchasing allows the buyer to make multiple purchases over a period of time, thereby spreading the market risk. In this way the buyer can respond rapidly to market movements, removing the risk of fixing all the energy at a time when the market price is at its peak. The final contract price becomes an average of the individual trades secured.
Find out More
Flexible buying should not be regarded as a guaranteed way to make a saving and the fixed v flex decision process for an individual client is beyond the scope of this introduction.
HTP can advise on a range of fixed and flex options so you can make an informed choice about the right procurement method for your business.
To find out how flex could work for your business, please get in touch now for a no obligation discussion!
