Ben Stickland takes a look at the current energy market and the role procurement is playing in helping organisations mitigate the ongoing challenges.
“How should companies respond to the current energy market?”
It’s a question I’ve been asking candidates for my recently retained Category Lead – Energy role at Alliance Healthcare.
The energy market in the UK has been a hot topic for months now, with a number of changes taking place that are affecting businesses of all sizes.
Currently, wholesale gas and electricity prices have been fixed for firms from October until March 2023, but the help is under review due to the cost.
One of the common themes I’m hearing from large organisations is that they are finding a lack of visibility looking ahead for energy spend.
They want to centralise energy procurement and increase the use of on-site renewables, all while working towards their ESG and reducing reliance on the external grid.
So, what can businesses do?
In terms of quick wins, companies can reduce their energy consumption through a number of measures, such as investing in energy-efficient equipment, implementing building energy management systems, and, of course, investing in renewable energy sources.
Another key strategy is energy storage, which is becoming an increasingly important way for companies to balance supply and demand, with examples including; batteries, thermal and hydrogen storage.
Investment in on-site generation is becoming more and more popular with companies exploring the use of solar PV or wind power on their premises which reduces reliance on the external grid.
Along with on-site generation, microgrids are another great option that can help to reduce external dependence and thus improve energy security.
Companies can also help to support the development of new technologies and policies that support the transition to a low-carbon economy by way of investment in the energy sector.
And, the procurement team is crucial in helping organisations address rising costs through:
- Energy efficiency: Implementing energy-saving measures in facilities and operations can reduce energy consumption and cost.
- Energy audits: Regular energy audits can identify areas for improvement and prioritise energy-saving initiatives.
- Contract negotiations: Negotiating more favourable energy supply contracts with suppliers.
- Renewable energy sources: Investing in renewable energy sources such as solar or wind can help reduce dependence on traditional energy sources and lower costs over time.
- Energy management systems: Implementing energy management systems can help monitor and control energy consumption in real-time, reducing waste and cutting costs.
- Energy hedging: Hedging against energy price volatility through financial instruments can help mitigate the impact of rising energy prices.
- Collaboration with stakeholders: Collaborating with key stakeholders such as suppliers, customers, and regulators can help mitigate the impact of rising energy prices and find mutually beneficial solutions.
What impact has this had on procurement recruitment?
Clearly, for organisations to mitigate the risks of a volatile energy market, procurement professionals adept in the areas outlined above are in great demand.
With sustainability and ESG goals high on many organisations’ agendas, I foresee an increase in roles such as the Category Lead – Energy opportunity at Alliance Healthcare.
As Ian Brenton, Group Procurement Director at Alliance Healthcare, said in our Head2Head conversation, about the Category Lead – Energy role, “This role is the first of the roles we are going to centralise. What I am looking to do is bring the sourcing and strategy for procuring energy into the centre with a view to how we hit our carbon reduction targets, how do we move to 100% renewable energy, how do we eliminate gas and how do I drive that strategy from the centre.”
By focusing on energy efficiency, storage, and engagement, I have no doubt that companies can set themselves up for success.
If you’re a large organisation looking to centralise energy procurement, drive the use of renewables, or even phase out fossil fuels from energy spend, we’re perfectly placed to help find you the perfect candidates at Procurement Heads and would welcome a conversation about how we can partner with you.