Expert View: Energy purchasing - how to manage risk and remain flexible
A flexible electricity contract can create opportunities for generating income that help you make more from your energy. However, it can also increase your exposure to risk. So how do you find the right balance?
With a flexible energy contract, your business has the power to decide when and how to buy your electricity, reducing your vulnerability to price peaks in the wholesale market. For example, you can choose to buy from a range of time-periods (day-ahead, week-ahead and so on) or different tranche sizes.
However, the purchasing process can be complex – and the associated uncertainties raise your level of risk. What’s more, developing the expertise and resources needed to create and deploy a viable energy management plan can be time-consuming.
What do you need to consider?
Working in partnership with a supplier that has the right expertise and ability to trade can simplify your development of an effective purchasing and risk management strategy. In your discussions, you should think about:
1. People. Who has the authority to make energy purchasing decisions? How quick is the reaction to market changes?
2. Timing. Do you need to change when you buy energy - if so, by how much?
3. Type. How flexible is your electricity supply contract?
4. Pricing. How much are you prepared to pay for your wholesale energy? What’s the lowest price you’d accept when selling the electricity you generate?
How Haven Power approaches risk management
We work alongside our customers to understand their strategy and help define their processes. This also means gaining an insight into the budget available and level of flexibility, as well as their attitude to risk.
We also review how the customer wants to handle forecasting, help define key performance criteria, and determine the most suitable implementation approach.
Haven Power’s in-house Trading Desk can assist in setting price alerts for customers, tracking the market, and conducting transactions. We regularly report on agreed key performance indicators and have quarterly face-to-face reviews with every risk management customer. For investors and senior stakeholders, our annual Board Report summarises how the year’s activities have mitigated risk and contributed to the success of the business.
To discuss your organisation’s risk management requirements, please get in touch with Haven Power quoting reference HP255.
Tel: 01473 707755 Email: email@example.com www.havenpower.com
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