5 Factors Impacting Energy Procurement In 2021

The procurement of energy has become a critical category for many companies. Both direct and indirect buyers are increasingly cognisant of how factors including sustainability, rising energy costs, disparities between federal and state governments, and technological developments will impact their organisation.

Below, PASA addresses five factors impacting energy procurement in 2021.

1. Cost management

Post COVID-19, many organisations are looking to cut costs in any way they can.

But in the energy sector, choosing to make short-term cost savings can sometimes mean foregoing the most sustainable options.

Procurement professionals must find ways to balance the rising costs of energy with their organisation’s long-term sustainability goals. Alternate ways to reduce cost include effective forecasting, implementing a strategic buying program, optimising contracts, and driving supplier competition.

2. Sustainability

Procurement professionals will need to adopt a robust sustainability strategy so that buying clean and renewable energy remains a priority in the coming years. This will help to ensure that purchasing activity aligns with organizations’ goals for achieving a net-zero carbon future.

When procurement commits to buying energy sustainably, not only can they reduce costs in the long term, but they’ll improve their organisation’s reputation and meet the expectations and demands of internal and external stakeholders.

As well as contributing to major shifts in business priorities, COVID-19 has disrupted supply chains across the globe. Renewable energy projects were predicted to boom in 2020, but some projects have been stalled.

3. Federal law vs state law

There is no question that the future of energy is green. It is predicted, for example, that five of Australia’s 16 coal plants will close before 2025 as more and more clean energy is connected to the grid.

But despite these reassuring advancements, policies and regulations differ significantly across Australia, causing some confusion for the sector and procurement professionals buying these services.

While all Australian states have committed to a net-zero emission target by 2050, a more unified approach between state and federal governments would make it easier for energy providers to meet customer demands and provide a consistent, affordable, and sustainable service.

4. Technology

Technological advancements in the energy sector will enable procurement professionals to better meet their sustainability goals.

Cleantech projects including energy storage, microgrids, and distributed generation make it easier than ever before for procurement to buy green energy at affordable prices, driving value and reducing their organisation’s carbon footprint.

5. Risk

A comprehensive risk management strategy can help mitigate the disruption caused by fluctuating energy markets. Techniques such as conducting global market analyses or setting stringent supplier KPIs will enable procurement professionals to be more confident in their buying decisions.

Energy Day – Thursday 6^th May 2021

This one-day PASA category event will take an in-depth look at energy procurement, its main issues post-COVID, and, in particular, address the three biggest questions facing corporate energy buyers in 2021:

• How do we mitigate the rising costs of energy for our business operations?
• What alternative energy sources should we be considering, including renewable energy sources?
• What should our emissions goals be and how can we achieve them within a reasonable timeframe?

To find out more and register for the event, click here.