Common Energy Procurement Mistakes for Businesses in Australia
In today’s volatile energy market, businesses may incur significant expenses due to incorrect energy procurement decisions. A report from the Australian Energy Regulator (AER) states that commercial energy prices increased by 25-30% between 2022 and 2024. The increasing price paradigm is likely to continue in the next few years, driven by global geo-political unrest, supply shocks, grid instability, and evolving policies.
Despite such a volatile scenario, many businesses continue to seal outdated energy deals by ignoring the flexible purchase models and misreading the tariff structures. Energy procurement is not all about comparing plans from different providers. Nowadays, procurement strategy must include risk appetite, consumption patterns, and future regulatory requirements. According to a report by the ClimateWorks Centre, businesses can potentially prevent expenses up to 10-25% by avoiding the common energy procurement mistakes.
Common Energy Procurement Mistakes
In the following section of this writing, you will find the most frequent mistakes committed by businesses during energy procurement. Besides discussing mistakes, the article will also educate the readers on how to avoid those common mistakes.
1. Insufficient Market Understanding
The multifaceted energy market in Australia has been influenced by a range of factors such as policy changes, weather, market reforms, and more. As a result, energy price variations are frequent in the country. The enterprises should procure an energy plan after analysing these factors with precision. A robust market research and a strong understanding of the energy market are imperative to make the right procurement decisions.
2. Risk Assessment Incompetence
A proper risk assessment procedure should be in place since the energy market is volatile. Inadequate risk management strategies can make organisations financially vulnerable. Therefore, businesses must have a diverse procurement portfolio to withstand the market fluctuations and keep their budget for energy expenditure stable.
3. Inefficient Contract Management
Commercial energy contracts are complex and require constant monitoring. Common errors in energy contracts management include failure to track contract end date, missing out on negotiation chances before renewal, overpayment due to contract term violations, and more. Businesses must focus on implementing a profound contract management strategy.
4. Overlooking Sustainability Options
Renewable energy has been gradually becoming a steady alternative to conventional non-renewable energy. Besides delivering clean and sustainable energy solutions, renewable energy is a cost-competitive option. Therefore, businesses should consider investing in solar energy for a sustainable energy solution. Investing in solar also helps businesses leverage the government-backed incentives to save money.
5. Absence of Data Analysis and Monitoring
An effective energy procurement should be a data-driven procedure. Organisations that invest in smart energy management systems can easily optimise their decisions on energy procurement. Data-backed decision-making brings accuracy, cost-effectiveness, and sustainability for businesses.
6. Overlooking Expertise & Consultation
Many businesses overlook the importance of professional consultation on the energy procurement process. Small-scale businesses overlook the consultation of professionals to save money, while large businesses also often ignore professional expertise. As a result, the energy procurement goes wrong for such businesses, resulting in high energy expenditure.
Consult Connect Business Energy
Are you looking for professional support for seamless energy procurement for your business? Connect Business Energy can help you in this regard. If you are spending more than $2500 on your energy bills, it is time to consult us. Compare plans and enjoy our on-the-spot switching service to optimise your energy expenses. We leverage advanced technologies and data-driven strategies to find the best energy procurement offers and terms for our clients.
Professional guidance from Connect Business Energy also ensures that businesses bypass the mistakes involved in energy procurement. An effortless energy procurement will eventually help your business to save money and build a sustainable energy solution that contributes towards Australia’s net-zero carbon emission plan by 2050.