Switching energy supplier and the benefits of tendering
Switching energy suppliers for UK businesses: when, why, and how?
Energy is a constant cost for businesses, with essential gas, electricity, and water bills often forming a large part of overheads—especially for companies with large or multiple sites.
Scrutinising and managing energy prices on a regular basis is a must in order to enable cost certainty, and protect profit margins. By doing so, you may find that switching suppliers will give you better rates, improved service, and access to sustainable options.
Energy tendering—energy suppliers submitting competitive bids to businesses, allowing you to compare and secure the best rates and terms for your energy needs—has become increasingly popular, and necessary, however the process can be complex. Energy brokers and energy procurement consultants simplify the tendering process, helping businesses to maximise savings, protect profitability, and choose the best suppliers for their needs.
Why should businesses switch energy suppliers?
Switching energy suppliers gives you the chance to optimise costs, enhance service reliability, and access new energy solutions for your business. Unlike domestic contracts, commercial and industrial energy contracts are more intricate, often covering large-scale energy needs and tailored pricing.
Here’s why you should consider switching contracts:
Cost savings
One of the main motivations for switching suppliers is cost savings. While market prices play a significant role, it's crucial to also consider the distribution of non-energy costs, which can account for nearly 50% of your total energy expenses. Evaluating these variances involves a detailed analysis of several components:
- Wholesale Prices: The cost of purchasing energy on the market.
- Distribution Costs: Charges for delivering electricity from the transmission system to end users.
- Transmission Costs: Fees for transporting electricity over long distances via high-voltage networks.
- Taxes and Levies: Various charges such as the Climate Change Levy (CCL), Renewables Obligation (RO), Contracts for Difference (CfD), and Capacity Market (CM) fees.
However, it’s important to consider that savings may also depend on wholesale price dynamics. In market scenarios like backwardation or contango, the analysis of price trends over time indicates whether a contract's price is increasing or decreasing. Cost advantages may not be realized, even if the terms of new contracts seem better than those of old ones.
An experienced energy broker will guide you through purchasing physical energy forward contracts and have direct access to wholesale market experts, including traders, hedgers, and analysts, who monitor market trends daily.
Enhanced customer service
Switching suppliers also opens opportunities to experience better customer service. Different suppliers provide varied levels of service, factors may include; reliable support, timely updates, and faster issue resolution..
Sustainability and environmental impact
Switching to renewable energy suppliers who offer options such as wind, solar, and hydro energy reduces your carbon footprint, strengthens CSR (Corporate Social Responsibility), and contributes to your sustainability goals and objectives.
Access to new energy technologies
Suppliers will often introduce advanced energy solutions like smart meters, automated energy monitoring, and demand response programmes. These technologies improve energy efficiency, reduce waste, and provide insights into consumption patterns that can inform future decisions, helping your business stay at the forefront of energy management.
The energy tender process: what you need to know
Energy tendering can be complex and time-consuming, so it’s a good idea to start the process at least 3-6 months before your current contract ends. This allows ample time to explore suppliers and select the best fit. Waiting until the last minute can lead to rushed decisions and even higher rates.
Why start early?
By starting the tendering process early, you allow ample time for comparing and negotiating contracts, and you can avoid the risk of default energy tariffs and rates, which are often higher than contracted rates.
Early engagement also provides more leverage in negotiations, which can help your business to secure more favourable terms.
Steps in the energy tender process
- Market analysis and supplier research - analysing market trends and understanding price fluctuations, to make the most of your savings.
- Request for Proposal (RFP) - this stage involves creating an RFP to shortlist potential suppliers that meet your specified energy requirements, contract terms, and service expectations. This analysis will allow you to make informed comparisons and identify suppliers aligned with your business’s goals and is the focal point of tendering.
- Potential suppliers will respond with proposals tailored to your business’s needs.
- Proposal evaluation - the evaluation phase requires a close examination of proposals based on pricing, service levels, sustainability options, and contract flexibility. This step can be challenging without industry insights, as it involves analysing complex pricing structures and hidden fees.
- Negotiation and contract signing - negotiating terms is crux point, as even slight rate adjustments can lead to substantial savings. After negotiations, the selected supplier’s contract is signed, marking the start of the new energy partnership.
Not sure when to renew your energy contract? Read our expert advice.
Challenges of managing energy procurement internally
Energy procurement is time-intensive and complex, especially for businesses unfamiliar with the intricacies of energy contracts. Without the support of a consultant or expert energy broker, you may overlook cost-saving opportunities or fall into long-term, inflexible contracts.
Energy consultants bring industry expertise; they understand market dynamics and provide invaluable insights to help businesses to make data-driven decisions.
What about switching water suppliers?
You should also take some time to review your water supplier and assess whether you are missing out on any cost-saving opportunities there too. Since the UK deregulated the non-domestic water market in 2017, businesses can now choose their water supplier.
Switching water suppliers is often quicker than energy, as contracts are simpler. However, you’ll need to make sure your account is up to date and free from billing discrepancies. Investing in technology like Automated Meter Reading (AMR) makes it easier to monitor water usage in real time.
AMR systems provide:
- Online tracking: Access reports and graphs showing how and when water is used.
- Cost control: Spot irregularities, such as leaks, and address them early.
- Insights for efficiency: Use data to optimise water usage and reduce waste.
A trusted partner can also support with water-saving initiatives such as leak detection, water hygiene management, and installing efficiency devices. These services reduce consumption and ensure compliance with safety regulations.
How an energy consultant or broker can help
An energy consultant assists with each step, from market research to negotiation, easing the burden on internal teams and ensuring optimal contract terms.
These market experts also have strong relationships with suppliers, which can allow them to access exclusive rates and terms.
Ultimately, energy experts are used to save time and cut overheads on your energy use. Here is our checklist to see if it would be beneficial to seek the support of an energy broker:
- You don’t have the time to scour the market for the best rates.
- You are spending significant amounts of its overheads on energy bills.
- You have multiple or large sites that consume large amounts of energy.
- You haven’t got a thorough understanding of the energy market.
- You aren’t sure what to do to achieve effective change in terms of its cost and energy use.
How World Kinect energy brokers can help businesses review and switch energy suppliers
World Kinect brings years of experience and a vast network of supplier connections to guide businesses through the energy procurement and tendering process.
Our expertise provides clients with not only comprehensive options but also peace of mind, knowing they’re backed by a team dedicated to optimising energy investments.
Industry Knowledge and Supplier Access
World Kinect’s vast supplier network offers businesses a range of providers tailored to their needs. Our team recommends the best options based on service quality, environmental goals, and pricing, giving our clients more choices and competitive rates.
Real-Time Market Monitoring and Pricing Insights
Our experts monitor price trends, supplier performance, and new technologies, helping clients enter or renew contracts at the optimal time. This proactive approach ensures informed decisions for maximum savings.
Simplifying the Complex Tendering Process
We handle the complexities of tendering—from RFPs to contract negotiation—making the process clear and manageable. Our consultants simplify every step, ensuring full understanding before commitments are made.
Experienced Negotiation for Best Rates
World Kinect consultants leverage extensive experience to secure favourable rates and terms, identifying any hidden costs and ensuring transparency for optimal client results.
Get better energy rates with World Kinect
Partner with World Kinect for expert guidance in maximising savings and achieving sustainable energy goals.
Contact our team today to see how our tailored energy tendering approach can boost your business’s efficiency and growth.
