Business Energy Procurement Guide

What Is Energy Procurement?

Energy procurement is the process of finding and securing the right business energy contract based on your needs, usage, and risk appetite. It includes assessing how your business uses electricity and gas, comparing supplier offers, and choosing the tariff structure that makes the most financial sense.

For some businesses, this means selecting a fixed deal for budget certainty. For others, it may involve a flexible contract that takes advantage of market trends or sustainability commitments.

Whether managed internally or through BusinessEnergy.com, the aim of energy procurement is always the same: to avoid overpaying and to reduce contract risks.

How Does Energy Procurement Work?

The steps involved in business energy procurement typically include:

• Understanding your energy profile: Analysing historical usage, meter types, and seasonal trends to define your energy needs.
• Market comparison: Comparing contract options from a range of suppliers, considering not just price, but contract length, green credentials, and flexibility.
• Negotiation: Ensuring contract terms (such as termination clauses, standing charges, and pass-through costs) are fair, clear, and suited to your operations.
• Contract selection and switch: Once the best option is agreed, you’ll proceed with the supplier switch and contract signing, ideally with no disruption to supply.

Some businesses do this in-house. Others rely on an energy procurement partner to handle the process from start to finish.

Which Businesses Benefit from Energy Procurement?

All businesses use energy, and most can benefit from energy procurement. The level of involvement depends on your size, budget, and operational complexity.

• Micro businesses may simply need help finding a better deal when their contract ends.
• SMEs often seek expert guidance to avoid expensive or misleading contracts.
• Larger businesses may require a formal strategy that aligns energy purchasing with cost control, ESG targets, and long-term planning.

Even if you’re not ready to commit to a new supplier, reviewing your options during a renewal period is key to avoiding rollover rates.

Benefits of Energy Procurement

Effective energy procurement brings a range of benefits, including:

• Lower risk of hidden costs:
  Procurement ensures contract terms are clear and fair, reducing the risk of unexpected charges.
• More reliable suppliers:
  Trusted providers are vetted for financial stability, customer service, and billing accuracy.
• Improved forecasting:
  With visibility into your energy usage and contract terms, you can forecast budgets more accurately.
• Timely renewals:
  A procurement partner will monitor your contract end date and help you avoid expensive out-of-contract rates.
• Potential savings:
  Comparing offers and negotiating well-timed contracts often results in significant savings over standard tariffs.

What Types of Business Energy Contracts Exist?

There are several types of business energy contracts to choose from, each with different risk and reward profiles:

Fixed Contracts

A fixed-term tariff where your unit rates and standing charges remain the same throughout the contract (usually 1-4 years). Ideal for businesses wanting cost certainty.

• Pros: Budget stability; protected from market price spikes
• Cons: Won’t benefit if prices fall during the contract

Blend and Extend

A supplier lowers your current rates by blending them with today’s market prices and extends your contract term. Designed for businesses that locked in when rates were high.

• Pros: Reduces current costs; avoids early termination
• Cons: New blended rate still may be higher than current market levels

Flexible (Flex) Contracts

Typically used by large businesses, this option allows you to purchase energy in tranches at wholesale prices. Requires close monitoring of the market.

• Pros: Potential to secure energy at lower rates
• Cons: Higher risk if buying is poorly timed; needs market expertise

Pass-Through Tariffs

Separates wholesale costs from third-party charges (e.g. levies, transmission fees), which vary throughout the year.

• Pros: Greater transparency and possible savings
• Cons: Costs can fluctuate; better suited to businesses with detailed energy knowledge

What Is an Energy Procurement Strategy?

An energy procurement strategy is a defined approach to buying energy that takes into account your commercial priorities, contract preferences, and market risks.

It typically includes:

• Timing and market monitoring
• Preferred supplier criteria
• Sustainability or net-zero goals
• Risk tolerance and price caps
• Internal approval processes

Not every business needs a full procurement strategy, but if your energy costs are high or your usage is complex, it’s an essential tool.

What’s the Difference Between Regulated and Deregulated Energy Markets?

In regulated energy markets, a single utility sets the price and supplies energy. In deregulated markets, such as the UK, multiple suppliers compete for your business.

Since the Electricity Act 1989, UK businesses have been able to choose their suppliers. This competition gives businesses more control, but also requires greater awareness to avoid costly contracts or hidden fees.

How Businessenergy.com Supports Energy Procurement

At Businessenergy.com, we simplify the entire energy procurement process. We act on your behalf, not the supplier’s, to help you:

• Analyse your usage
• Understand contract options
• Compare prices and terms
• Negotiate favourable deals
• Avoid common procurement pitfalls

We also offer cost optimisation services like kVA (capacity) reviews and TCR (Targeted Charging Review) to help your business reduce any unnecessary charges through bill analysis.

Whether you need a quick renewal or a multi-year strategy, we’re here to help you make confident, informed decisions.