Flexible risk managed solutions
Flexible energy procurement can be incredibly beneficial to any organisation.
Taking advantage of price drops
Businesses can choose from thousands of different energy products. One of the first choices you will need to make is between fixed and flexible procurement.
Choosing a flexible risk managed contract means you will make multiple purchasing decisions throughout the life of your contract. The price you pay at each juncture will vary depending on the market at the time of purchase.
Complete cost transparency
A flexible energy contract gives you complete visibility over the various supplier and industry costs, as well as the raw cost of your gas and electricity. And because you’re purchasing directly from the wholesale market, you can be sure that you’re getting the best price available.
Flexible procurement helps reduce premiums across both commodity and non-commodity costs. Although fixed-price contracts give you budget certainty, the contract price has a risk premium built in to protect suppliers from unexpected market movements.
Flexible purchasing means that you can buy energy over a longer period and have more opportunity to benefit from bearish markets. You don’t need to lock high prices in for a lengthy period. Instead, you can purchase energy in smaller tranches and spread the risk throughout the year.
Plan for — rather than react to — changes in markets
An effective risk management strategy can help protect your organisation from poor decision-making. A risk management strategy defines the level of risk your organisation is comfortable with, helping you make informed decisions within agreed risk parameters.
Benefits of this approach include:
- Total transparency of all contract costs
- Avoid large risk premiums built into fixed price contracts to protect suppliers
- Opportunity to take advantage of favourable markets when purchasing over a longer period
Moulding clear savings for Perspex International
By assessing wholesale market conditions, we were able to deliver a risk management strategy which resulted in significant year-on-year savings for electricity and gas.
FAQs
Flexible energy contracts let you make several energy purchasing decisions at wholesale market rates throughout the contract term, with complete visibility over supplier, industry and raw energy charges. A flexible approach needs more hands-on management than a fixed agreement, governed by a bespoke risk management strategy agreed with your energy partner – whether you lead decisions yourself or delegate.
A full view of the whole energy market is what creates the potential for cost savings with a flexible energy contract, letting you time purchases as energy prices shift. Complete cost transparency and the ability to spread risk across the year through multiple purchasing points add further value.
With a flexible power contract, businesses can buy in tranches to take advantage of lower wholesale prices rather than locking in a single rate, while complete cost transparency highlights where further savings on energy costs are possible.
How flexible contracts compare largely depends on your organisation’s size and risk appetite. Larger energy users typically have access to a wider range of flexible options, while availability can be more limited for smaller businesses.
Yes – green flexible energy contracts are available, letting you prioritise renewable sources while still buying in tranches at wholesale market rates. A Corporate Power Purchase Agreement (CPPA) is another potential route, securing renewable power directly from a generator or developer.
Yes – green tariffs can be combined with a flexible purchasing structure. Some providers pair renewable sourcing with tranche-based buying, letting you capitalise on market movements while securing renewable power, whether backed by REGOs or sourced directly from generators.
Talk to an expert
Working with a specialist energy procurement advisor helps reduce the risk of flexible purchasing, especially when they have full visibility of the wholesale market.
Daniel Turvey
Director: Risk
“Flexible procurement can be incredibly beneficial to any organisation, but it is also complicated to manage a strategy. Flexible buyers may need to make several vital procurement decisions each year, and prices can go up or down, driven by a plethora of global market fundamentals. Working with an expert with full visibility of the market can mitigate that complication and risk.”
Related services
As the UK’s largest consultancy, with 30TWh under management, we have plenty of buying options available. You may also be interested in…
Get in touch
Want help managing your energy services? Our experts can provide a range of solutions to help optimise your strategy.