Whilst dealing with the ongoing challenges of COVID-19, business leaders need to keep an eye on opportunities that present themselves. One such opportunity that has presented itself to business is Energy and Gas.
28% Energy savings achieved
Earlier this year on 26th May, Supply Clusters ran our inaugural Energy Blitz (see the yellow arrow on the chart). This event coordinated a significant group of our customers to take their energy volumes to market on the same day. The results were outstanding…an average of 28% savings.
We can confirm that the next Energy Blitz is set down for 13th October 2020…and significant savings opportunities are still available. Since our last event in May, NSW & VIC pricing has plateaued as wholesale prices approach generation costs. SA has rebounded whilst QLD has fallen further.
Current Energy prices are at long term lows:
- NSW and VIC prices are at 3.5 year lows
- SA prices are at 4.5 year lows
- QLD prices are at 5.5 year lows
Wholesale Gas prices down by 50%
The market is in a position to take advantage of favourable gas prices. Compared to 2019 pricing, wholesale Gas prices are down by a staggering 50%! In the past month, we have seen a number of our customers save millions.
What is the ‘Contestable Large Market’
If you spend more than $25K per annum in Energy in any one location, you are likely to be considered a ‘large market’ energy consumer. Energy retailers will negotiate prices with you based on your volumes, your load profiles and your risk (contestable energy large market). This can be facilitated through a third party energy broker or you can negotiate directly if your organisation has the expertise internally.
Similarly, if you consume more than 10TJ per year in Gas you can also take advantage of the reduction in gas pricing (contestable gas large market).
How do I take advantage?
If your energy or gas contracts are due to expire within 18 months or within 6 months in WA, you can lock in your pricing now for an agreed period of time. Today’s low prices can be negotiated to start at the end of your current contract, acting as an effective hedging strategy for your energy costs. Terms of new contracts are typically 2 or 3 years, however any time frame can be negotiated.
Creating competitive tension
Supply Clusters has been working with its customers to manage Energy for over 15 years. As an aggregator of expenses, we look to leverage the buying power of over 300 customers to lower costs. However, aggregating energy is not a simple exercise due to the following points:
- Each state is typically has its own supply market
- Each consumer’s load profile is assessed independently by suppliers
- Each consumer’s risk profile is assessed independently by suppliers
Supply Clusters recommends considering the use of a ‘Reverse Auction’ platform. Reverse auctions enable a customer’s individual volume, load and risk profile to be contested by a large number of energy suppliers.
Supply Clusters Energy Blitz – A unique opportunity to increase competitive tension
On 13th October 2020, Supply Clusters will be running its second ‘Energy Blitz’. Effectively, we are coordinating for many of our 300 customers to take their energy volumes to market on the same day.
The principle of the Energy Blitz is to have an enormous quantity of energy being auctioned on the same day, creating increased competitive tension. Each customer will still execute their own contracts through the supplier of their choice based on the results of the auction. When you consider combining today’s pricing and the concept of the Energy Blitz through a reverse auction platform, we have a unique opportunity at this current point in time.
What are the costs to participate in the Supply Clusters Energy Blitz?
Supply Clusters customers typically pay between $3,000 to $5,000 annual membership fees to access over 40 expense categories, of which Energy is one. The average ROI for members is 10 times.
Given the COVID-19 situation, the annual standard membership fee will be waived for any organisation currently not a customer of Supply Clusters that would like to take advantage of the Energy Blitz on 13th October 2020. Premium members who do take up a payable membership will also qualify for rebate across various categories including energy.
Why should I consider the Supply Clusters Energy Blitz?
- Energy prices at long term lows
- You can lock in long term pricing even if your contract expires in the next 18 months (6 months in WA)
- The Energy Blitz will create significant market tension by conducting a reverse auction for hundreds of customers on the same day – 13th October, 2020
- Supply Clusters membership fees waived for non-members
Supply Clusters Energy Blitz registrations close on Tuesday, 15th September, 2020
If you are interested in finding out more, please register your interest as soon as possible at our website.