Energy costs are an important yet variable input for many Canadian businesses. As the market is quite complex, it’s often a challenge for business operators to find efficiencies in their daily energy requirements. However, energy consultants can offer assistance in determining the optimal energy solution for a specific business.
Energy consultants work with companies to understand the business operation, energy requirements and risk appetite. An analysis of a company’s historical consumption rates and load profile is completed to determine an efficient purchasing strategy that mitigates risk in volatile energy market prices.
Energy Savings Products
Businesses typically utilize a number of different products to manage their overall electricity costs, including load following, market price and blocks. Load Following is a fixed price option that allows businesses to secure a set electricity price for a specified term, such as monthly or annually. It’s a common choice for businesses with a fixed budget and also shelters consumers from market price volatility. Market Price is a variable price option for electricity that fluctuates on an hourly basis, taking advantage of price swings in the market.
Blocks are an alternative solution that allow businesses to implement a strategy that can mitigate risks of market volatility. Consumers who choose block solutions purchase a specific portion of their electricity usage at a fixed rate, with the remaining portion subject to market prices. This can help businesses optimize electricity costs using hedging strategies that are mapped to an organization’s electricity consumption.
The most efficient block size is then selected, tailored to a company’s load profile and consumption pattern. There are two commonly used blocks: base-load blocks, which best serve companies operating on a 24X7 schedule, and peak block, which provides a volume of electricity for a fixed rate during the peak hours of 7am to 11pm, five days a week.
Although businesses using natural gas tend to share similar concerns with those utilizing electricity, there are some differences in market trends. Energy management solutions often focus on hedging all, or just a portion of natural gas volumes, while purchasing the remainder at an index price.
Although energy is tightly regulated, costs will no doubt rise, making it more important than ever for business operators to closely monitor their energy usage, and look for ways to gain efficiencies. With the help of an energy consultant, businesses can figure out new methods of controlling costs in the volatile electricity and natural gas markets.