Make energy contracts flexible to cut costs

12 September 2012

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12 September 2012 | Anna Reynolds

Energy buyers should exploit contracts to make cost savings by reducing consumption in response to market prices, according to the CEO of M&C Energy Group.

Speaking at The Energy Event at Birmingham’s NEC yesterday, Mark Dickinson, CEO of M&C Energy Group, providers of energy procurement services, urged buyers to ensure their energy supply contracts enable them to respond to demand with flexibility.

Dickinson advised energy consumers to have a strategy enabling a consistent global structure of contracts across different markets that allows buyers to exploit the opportunities open to their organisation.

The focus for energy procurement is to achieve maximum cost savings through demand-response mechanisms, where reducing energy consumption at critical times or in response to market prices could save businesses up to 15 per cent in costs.

He described the ‘evolution’ of energy procurement, which originally focused on tariff analysis and monopoly markets: “The traditional role of procurement was all about supplier choice and volume aggregation. Then people began to separate physical and financial supply and now the role is getting much wider.”

He called this latest stage “the holistic solution,” which also involved the blurring of roles in an organisation where all parties become involved in the procurement process.

Dickinson added it is the responsibility of procurement teams to invest in correct control and monitoring systems and stressed the need for access to data that can match consumption to how a company behaves: “Changes in behaviour can reduce energy costs and maximise energy efficiency, but it needs to be a culture, it needs to be enforced,” he said.

Dickinson also encouraged on-site generation as a way of saving on distribution costs.

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