16 August 2016
Any business that spends more than $100,000 a year on electricity will know the process of sourcing competitive offers from retailers is complicated and cumbersome, but a critical overhead that requires prudent cost control.
Dunedin company Energy Link has launched the Energy Exchange, a web site where businesses with large electricity bills can now contract electricity via a reverse auction or online tender style process.
Energy Link are consultants to the country’s largest electricity consumers and retailers. For example they provide procurement and strategy services to the country’s largest consumer Tiwai Aluminium Smelter, and price modelling and forecasting tools to major retailers such as Mercury Energy.
20 years of accumulated knowledge has gone into programming the mathematical algorithms on which The Energy Exchange is based. Capable of processing and analysing offers across thousands of sites on a single contract, the Energy Exchange is the first of its kind in New Zealand.
The Energy Exchange works for electricity consumers who are large enough to get non-standard rates from retailers, either because of their total energy spend (typically $75k or more), or because of the number of sites they have to supply. Managing Director Greg Sise believes The Energy Exchange now offers businesses who didn’t typically have the economies of scale to secure the best electricity contracts, the ability to do so now.
“Over the past 20 years our client base has been limited to very large users, those spending millions a year. Businesses spending under $500k bracket just couldn’t justify the time and cost of engaging an energy consultant or tendering with more than a couple of retailers,” explains Greg.
Jason Schurmann Procurement Manager from Scott Technology has been part of an initial market research panel for Energy Exchange, “At Scott Technology we have several sites across the country. It takes me at least 3-4 weeks every year to manage our electricity contracts, it’s a hideously time consuming process”.
The Energy Exchange has been developed with users like Scott Technology in mind, “Our platform removes the barriers to market for businesses spending as little as $75,000. Our belief is that these companies can expect to get savings of 5-10% on their electricity contracts relative to doing it themselves”, says Sise.
Better pricing is achieved through harnessing competition between retailers. Through the Energy Exchange businesses can access offers from across the retail market all at once, meaning they can be confident they’re getting the best possible deal available on the day.
“It’s far too time consuming to go out to all retailers individually, which means we aren’t 100% confident we’ve got the best deal. So the fact that The Energy Exchange has all the retailers in one place is attractive”, says Schurmann.
Larger consumers spending up to millions a year will also benefit significantly, through streamlining their energy procurement process. A fact put to the test in already, the Energy Exchange has already processed contracts for multiple clients, across 6,758 ICPs, representing a total consumption of 849 GWh pa (equivalent to 1.8% of New Zealand’s total annual energy consumption).
As the concept of The Energy Exchange is so new and a change in process for businesses, Sise and his team realise face to face education of the concept will be best. Sise will be hosting a series of events to present the concept to businesses around the country in September and October, to enquire about attending contact email@example.com.
For further information on The Energy Exchange visit www.energyexchnage.co.nz.
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About Energy Link
Energy Link was created by Managing Director, Greg Sise, in 1996 to assist smaller players to compete in the newly deregulated wholesale electricity spot market. Energy Link is recognised and sought out by New Zealand’s blue chip companies and government to provide electricity procurement, risk management, hedging, software and systems.
Energy Link is non-aligned and provides independent services to electricity and natural gas market participants, larger energy users, lines companies, independent retailers and generators, local government, government agencies and the investment community.Two decades on, Energy Link has the people, databases, and specialised in-house and online software systems to support clients through all stages of development and execution of their energy strategies. Energy Link’s three indices for fixed price electricity contracts – CFD, FPVV and mixed CFD/FPVV - are published monthly and widely used for assessing electricity contracts and are referred to in publications produced by the Electricity Authority.