Best Practices for a Successful Energy Procurement Strategy
Facility managers are faced with a number of responsibilities related to their organization’s energy use – including its procurement, consumption, efficiency and optimization. While getting the energy to run your building(s) might seem like the least challenging of these responsibilities, energy procurement is not quite as two-dimensional as you might think. In fact, it’s almost like buying a new car. Any option will get you from point A to B, but different cars can help fulfill different needs in better ways than others.
As with buying a car, there are a number of considerations facility managers should keep in mind when purchasing energy for their organization. Here are three best practices for a successful energy procurement strategy that meets your organization’s needs:
1. Pick the Right Partner
Facility managers should consider working with an independent consultant or partner when it comes to buying energy. The independent nature of working with an intermediary, rather than directly with a utility, provides an objective view of your best procurement options. And when picking who exactly to work with, favor someone with documented experience and time in the industry. Your partner should also work with a professional firm that takes the time to consider all facets of your business holistically, providing you the best energy options for your specific needs across the business (not just the cheapest option given your overall energy usage).
2. Aligns with Your Sustainability Goals
Facility managers should also consider how procurement strategies enable advancement toward sustainability goals. Energy efficiency comes into play once the energy has been purchased and is in use; however, there are sustainability considerations to make during the procurement process as well. First, you must identify what options exist and are realistic for your organization. For example, facility managers can consider whether they would like to purchase renewable energy as part of their procurement strategy in an effort to meet sustainability goals. Renewable energy is considered a premium, but many building owners will begin to find this option more appealing as part of their long-term sustainability efforts. If you’re not ready to use 100 percent renewable energy, then consider what might be more realistic for you at that time.
Facility managers that are focused on aligning their procurement and sustainability strategies might also consider on-site generation. Working capital can be put into building a solar or windmill farm on your organization’s property rather that enter into a power purchase agreement with an external windmill farm, for example.
3. Think Beyond Price Alone
Energy procurement inherently conjures a mindset around pricing. Energy prices fluctuate consistently. According to the U.S. Energy Information Administration, prices can vary every minute and fluctuate several times each day based on demand. Therefore, establishing a strong energy purchasing strategy can help control your costs and ensure you’re getting the best value.
However, buying energy for your facility on price alone can be a huge mistake. A number of additional factors outside of price should influence your energy procurement process. For example, understand how much energy you plan to use and consider the tactical uses unique to your facility – this impacts how much you buy and what you use. By thinking beyond the price and incorporating some of these broader factors into your energy plan, you can help ensure a successful strategy for your procurement model.
In many respects, buying energy is comparable to making any purchase with long-term implications, such as paying for a car, house or choosing which college to send your child to. Not all options are created equal, and some will serve you better than others depending on your particular needs. More specifically, working with the right partner and consultant, driving toward your sustainability goals, and considering factors outside of the cost are three tips that facility managers should keep in mind when approaching their energy procurement plans. Any option could take your energy procurement from A to B, but a hand-crafted strategy unique to your organization will take you further (hypothetically speaking) in the long run.
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