When it comes to the energy lottery, playing a ‘lucky dip’ strategy on business energy purchasing is unlikely to win you the jackpot.
Business energy broker ENER-G Procurement has published a free e-guide on managing energy risk to make the most of flexible purchasing.
The wholesale energy market can be daunting without effective planning. ENER-G’s expert advice will help purchasers develop a risk strategy to help them navigate the pitfalls of the energy market.
Mark Alston, Director of ENER-G Procurement said: “Businesses which have flexible energy contracts, or purchase energy on a volume basis, are heavily exposed to fluctuations in the energy market. In a volatile marketplace, prices can rise quickly and with little warning. A harsh weather front or some troubling market data is enough to bolster trade prices and leave businesses in the cold.
“Broader trends, like the government commitment to carbon reduction, or changing international patterns of supply, signal increasing volatility in energy markets. As this longer-term volatility rises, firms become more and more exposed.”
The ENER-G e-guide, entitled 'Playing the Energy Lottery - How to Manage Your Risk', provides useful information on all aspects of risk management. It outlines the importance of assessing and re-assessing: procurement needs, the management’s appetite for risk, and energy market position relative to competitors.
The guide also itemises the risk management tool kit businesses have at their disposal. This includes the primary instruments: forward purchases, swaps and options, but also includes the possibility of on-site generation, an option available for large businesses. Other risk management techniques, such as caps, floors and collars are also discussed as ways to set limits to any potential market losses.
The complexity of effective energy management means that many businesses seek the advice of expert brokers or consultants to help them understand the market. The guide includes helpful tips on where to seek this advice, as well as technologies which can help track and evaluate energy management.