The primary aim of flexible procurement is not to beat the market. It is, however, a tool to procure your energy smartly and to mitigate the risks associated with market fluctuations. In other words, it is a way of managing the price risk.
Flexible procurement used to be an approach only accessible to large users. The shift in the industry now accommodates users with consumption down to 2 GWh. Still, the larger the consumption, the more flexible products available. In clients’ mindsets, this was perceived to be a risky strategy and still is. Yet, what is riskier: taking just one bet or taking a series of bets on the price to average the outcome? History and experience show that the latter usually gives better results.
Additional advantages embedded in flexible purchasing:
Flexible energy procurement starts with a risk appetite assessment (the amount of risk the client is willing to take) and the strategy selection, yet it does not end there. Experience shows that best contract performance is achieved through a hands-on approach. Constant market monitoring and reassessment of the strategy throughout the contract are crucial for achieving best results.
Energy costs are an integral part of your budget, and managing energy smartly is key to increasing your margins. Now available to a larger part of market participants, flexible procurement is all about managing the risks of a commodity market.