Electricity Markets and Risk Reduction
Electricity Costs and the Commercial Supply Chain Strategies
Electricity and natural gas costs significantly impact profitability across all industries, especially within the supply chain. According to a recent banking industry study, energy expenditures average 4.1% of total manufacturing industry revenues, ranging from 0.8% to 12% depending on the business type. Consequently, when seeking substantial cost savings for corporate clients, energy expenditures are a primary focus.
Energy procurement is complex due to varying governmental regulations across regions. In regulated markets with limited provider options, innovative strategies can still optimize the volume, timing, and types of energy consumed, yielding measurable results despite being restricted to a specific supplier.
In deregulated regions, companies can benefit from competitive energy markets for electricity and natural gas. Electricity often represents a larger expense than natural gas, though natural gas can also be significant, particularly in manufacturing processes. By leveraging competition, clients can save between 10% and 25% on their total energy expenses. In North America, most of the United States and significant parts of Canada are deregulated, offering multiple energy provider choices. Globally, energy market deregulation exists in Great Britain, Western Europe, Australia, India, and parts of South America.
3 strategies we use to protect your business from rate increases.
We dive into three ways we help businesses reduce expenditures in today’s complicated energy marketplace. They are as follows.
- Creating formal energy procurement strategies.
- Understanding and following your current wholesale energy market(s).
- Track & Monitoring - Reporting on markets.
Developing Your Energy Procurement Strategy
We take the complexity out of energy procurement by crafting a tailored strategy for your entire organization. For regions with deregulated energy markets, we focus on securing third-party energy supplies. In regulated areas, we work to minimize energy usage and ensure your accounts are on the most cost-effective tariffs and rate classes.
Here’s how we do it:
- Comprehensive Analysis: We start by summarizing your energy exposure at each facility, including all hedged and unhedged contractual positions.
- Current Assessment: Our team conducts a detailed evaluation of your current energy procurement practices, including energy types used, sources, contractual commitments, usage volumes, and patterns.
- Risk and Goals Alignment: We assess your organization’s risk tolerance and flexibility, procurement objectives (e.g., budget certainty, diversification, lowest cost), and sustainability targets.
- Strategic Recommendations: We determine the best market pathways for energy bidding and contracting based on our findings.
- Contract Management: We keep track of all contract expirations and ensure timely renewals or renegotiations.
With Ananta, you have a dedicated partner managing your energy procurement needs, allowing you to focus on your core business while we ensure optimal energy strategies and savings.
Navigating the Wholesale Energy Market for You
We navigate the complexities of the wholesale energy market on your behalf. In deregulated markets, natural gas and electricity are traded at the wholesale level, where prices fluctuate multiple times a day due to various factors such as weather, geopolitical events, and maintenance activities. Here's how we manage this for you:
- Market Monitoring: We continuously track the wholesale prices of all forms of energy, ensuring we are aware of the fluctuations and trends in the market.
- Strategic Timing: Our team identifies optimal times to enter the market, leveraging market intelligence to understand price movements and secure energy contracts at the best possible rates.
- Bid Management: We handle the entire bidding process, selecting the best energy providers and timing bids to maximize cost savings for your organization.
- Risk Mitigation: By understanding the factors driving market prices, we help mitigate risks associated with energy procurement and ensure you are not overpaying for your energy needs.
With Ananta Energy Source, you can trust that we are managing the intricacies of the wholesale energy market for you, allowing you to focus on your core business while we secure the most favorable energy contracts. We have resources to accurately review forecasts or to confidently predict when a particular market will change.
Tracking and Monitoring Your Energy Accounts
We take a proactive approach to energy procurement by continuously monitoring energy markets, analyzing data, and adjusting strategies to ensure optimal outcomes for our clients. Here's how we manage this process for you:
- Constant Market Surveillance: We keep a close eye on energy markets, tracking fluctuations and trends in real-time. This allows us to stay ahead of market movements and identify opportunities for cost savings.
- Data Analysis: Our team diligently reviews detailed data on your energy utilization and costs. By understanding your consumption patterns and expenses, we can tailor our strategies to your specific needs.
- Strategic Adjustments: We adapt our procurement strategies based on market conditions. Anticipating changes in the cost of natural gas or electricity enables us to seize opportunities to re-contract at preferential pricing.
- Opportunity Seizing: We actively look for market opportunities to secure better rates when contracts are due for renewals. Failure to act promptly on these opportunities means missing out on potential savings.
- Reporting and Communication: We provide regular reports and updates on market conditions and procurement strategies, keeping you informed about how we are managing your energy needs and the resulting savings.
