It is predicted that enterprises will spend a stunning £61.56 billion on smart energy solutions by 2030.
Companies are seeking innovative solutions to optimise their energy procurement strategies. One such solution is the use of IoT platforms and sensors, which are transforming how businesses manage energy acquisition.
What is Energy Procurement?
Energy procurement is the process of sourcing energy at the most competitive prices while ensuring a reliable supply that meets the operational needs of a business. It involves negotiating contracts with energy suppliers, understanding the business’s specific energy requirements, and managing energy consumption.
Effective energy acquisition can significantly impact a company’s financial performance by reducing costs and optimising energy use. It also demonstrates a commitment to environmental sustainability, especially in industries seeking to lower their carbon footprint.
How Does It Work?
The energy acquisition process involves several key steps that help businesses identify the best energy sources and secure advantageous contracts.
The typical steps in energy acquisition include:
1. Needs Assessment
The process begins by assessing the energy requirements of the business, taking into account factors such as size, energy consumption patterns, and sustainability goals.
2. Market Research
Once the needs are established, the next step is to evaluate potential energy suppliers. This involves analysing supplier reliability, sustainability credentials, and pricing structures.
3. Contract Negotiation
After identifying suitable suppliers, the next step is negotiating the contract terms. This typically includes agreeing on pricing structures (fixed, variable, or blended), contract length, and any additional terms such as renewable energy provisions.
4. Implementation
After contract finalisation, the new energy supply agreement is implemented. The business transitions to the new supplier, ensuring seamless energy delivery without disruption to operations.
5. Monitoring and Management
Continuous monitoring of energy consumption is critical. This ensures the company stays within contract terms, identifies inefficiencies, and manages supplier relationships.
6. Review and Adjust
Regular reviews of the procurement strategy are necessary to adapt to changing market conditions, regulatory updates, or shifting business needs.
Energy Procurement Strategies
Effective strategies are essential for maximising cost savings and ensuring reliable energy supply. Some common strategies include:
- Fixed Pricing: Locking in energy prices for a set period to avoid market volatility.
- Variable Pricing: Taking advantage of fluctuating market prices, though this comes with more risk.
- Renewable Energy Contracts: Securing energy from renewable sources to support sustainability goals.
- Energy Hedging: Using financial instruments to mitigate the risk of future energy price increases.
Each strategy is tailored to the business’s unique needs and market conditions, and selecting the right approach requires careful analysis of both immediate energy needs and long-term sustainability goals.
How IoT Platforms and Sensors Enhance Strategies
The advent of IoT platforms and sensors has revolutionised energy procurement by providing real-time data and insights, allowing businesses to optimise their energy use and procurement strategies. IoT can assist at several critical stages of the energy acquisition process:
1. Needs Assessment
IoT sensors provide accurate, real-time data on energy consumption patterns throughout a building. This allows businesses to perform a more precise needs assessment, understanding where energy is being used efficiently or wasted.
2. Contract Negotiation
IoT data on energy consumption patterns helps businesses negotiate more tailored contracts with suppliers. For example, by providing data that demonstrates when and where energy consumption is highest, companies can secure contracts that accommodate peak usage periods more efficiently, potentially reducing costs.
3. Monitoring and Management
One of the most powerful applications of IoT in energy procurement is the ability to monitor energy consumption in real-time.
IoT-enabled smart meters and sensors continuously track energy usage across commercial buildings, enabling businesses to identify inefficiencies and optimise energy consumption instantly.
4. Review and Adjust
With IoT platforms, businesses can automate the review process by continuously collecting and analysing energy data. IoT platforms can also send automated alerts when certain energy thresholds are crossed, ensuring that businesses remain agile and can react quickly to changing conditions.
