The 5th Pillar of Energy Procurement via an Auction

by Erin McAfee | Apr 19, 2024 | Uncategorized

Regardless of the innovation in electrification technology, construction of microgrids, monitoring devices and sensors to support operational efficiencies (all of which are crucial components in the drive to net zero by 2050), the one variable that is often undervalued is how energy is purchased. An efficient and competitive energy procurement process and strategy greatly impacts rates and favorable contract terms for the life of an energy agreement. 

EnerConnex combines extensive industry expertise and tech-enabled processes to help organizations manage their power, natural gas, energy risk, and carbon management objectives.

Features of EnerConnex Procurement Services: The ECX Marketplace is the latest online platform developed by the pioneers of the reverse auction technology, with the capability to manage complex energy products, green power and pricing structures.

Everything begins with energy! Such as energy efficiency programs, lighting upgrades, monitoring energy demand to name but a few. Yet, it all comes down to energy spend.  Please note, energy can be the 2nd or 3rd highest operating expense for an airport and is usually procured inefficiently and without significant competition. 

To put into perspective, the cost of energy from January 2021 – January 2024 increased 28% and continues to show an upward trajectory. Energy Sourcing is potentially the easiest strategy to increase gross profit and establish budget certainty.

EnerConnex has the ability, via our Energy Procurement Auction platform, and our robust and transparent process coupled with one of the largest supplier networks of over 80 plus suppliers in North America to provide the lowest possible price for electricity, natural gas, and green power.

By managing energy spend, organizations can establish budget certainty and identify and appropriate funds for other mission critical energy projects. Additionally, these actions fall under the scope of airport control without any outside reliance from private or public funding to determine if and/or when to go to the market for strategic energy purchases. Energy auctions empower airports to be more agile and react to market trends to optimize their buying power.

Celebrate Earth Month with EnerConnex

by Erin McAfee | Apr 2, 2024 | Uncategorized

As we celebrate Earth Month this April, it is important to remember the impact that our actions have on the environment. At EnerConnex, we are committed to promoting sustainability and doing our part to help reduce our carbon footprint. There are many ways you can join us in celebrating Earth Month and making a positive impact on the planet.

One way to celebrate Earth Month with EnerConnex is by making small changes in your daily routine to reduce energy consumption. This could include turning off lights and electronics when not in use, using energy-efficient appliances, and adjusting your thermostat to conserve energy. By being mindful of how we use energy, we can help reduce greenhouse gas emissions and protect the environment.

Another way to celebrate Earth Month is by supporting renewable energy sources. EnerConnex offers renewable energy solutions that can help businesses and individuals reduce their reliance on fossil fuels and transition to cleaner energy sources. By choosing renewable energy, you can help reduce carbon emissions and promote a more sustainable future for our planet.

You can also celebrate Earth Month with EnerConnex by spreading awareness about the importance of environmental conservation. Share information about sustainability practices, participate in community clean-up events, and advocate for policies that support renewable energy and environmental protection.

This Earth Month, let’s all do our part to protect the planet and create a more sustainable future. Join EnerConnex in celebrating Earth Month and making a positive impact on the environment. Together, we can make a difference and work towards a healthier, greener planet for future generations. Remember, small changes can make a big impact!

Understanding Energy Procurement: Benefits and Processes Explained 

by Erin McAfee | Mar 13, 2024 | Uncategorized

Most modern businesses need energy to remain operational — whether that means keeping manufacturing plant lights on and machines running, or securing sufficient power for large servers to ensure core services stay online. These needs, and others like them, are common in a variety of industries but are particularly important for commercial, industrial, government, and institutional facilities. 

The problem is that the energy market is complex and can be difficult to understand. Lots of businesses simply can’t invest the time or resources it takes to secure the best possible energy prices or contract terms based on their unique business needs. 

This is where the knowledge and strong supplier relationships typical of an energy procurement partner come into play. 

Here, we’re talking all about energy procurement, from partnership to pricing and everything in between.

What Does an Energy Procurement Partner Do?

First and foremost, an energy procurement partner is there to help your organization navigate the complexities of the energy market and optimize your energy procurement strategy to drive lower energy costs and higher energy efficiency. 

Here’s how that typically unfolds: 

Market Analysis 

A solid procurement partner will monitor the current energy market, analyze trends, and assess factors that may impact energy prices, such as supply and demand dynamics, regulatory changes, and geopolitical events. 

Supplier Management 

An effective procurement partner will handle supplier relationships for you. By maintaining these relationships, your procurer will negotiate contacts and contract terms by leveraging industry expertise and market knowledge to secure favorable rates and conditions that meet or exceed your expectations, ultimately helping you achieve your long-term business goals. 

Strategy Development 

An ideal procurement partner will not only develop a strategy for you with your best interests in mind but will ensure that you’re part of the process. Collaboration is key to effective procurement strategy development to deliver customized approaches that are tailored to your specific goals, risk tolerance levels, and budgetary constraints. 

Reverse Auction Bidding 

In energy procurement, there are effective and not-so-effective ways of securing the best deals and contract terms with vendors — one of the most successful methods being reverse auction bidding. 

Unlike a typical auction where the highest bidder wins, this method of auctioning turns the bidding toward the supplier, where they’ll compete with other vendors to offer the lowest prices to win business. 

Here’s a brief breakdown of how reverse auction bidding works: 

1. Preparation: As the buyer, you’ll work with your procurement partner to define your energy requirements, including volume, contract duration, delivery terms, and any specific criteria or requirements necessary for your success. 

2. Invitation to bid: Next, your procurement partner — who should have a vast contact list of vendors — will invite qualified energy suppliers to participate in the reverse auction. This invitation usually includes the terms and conditions of the procurement, as well as instructions for the bidding process. 

3. Bidding: During the auction, suppliers submit bids electronically through a designated platform. The bidding typically occurs in rounds, with each round allowing suppliers to adjust their prices based on the current lowest bid. 

4. Real-time monitoring: Along with your procurement partner, you’ll be able to monitor the auction in real time to see all offers on the table, including the current lowest bid and how it compares to other offers. 

5. Bid evaluation: The auction continues for a set period, during which suppliers have the opportunity to revise their bids in response to competition. When it’s time to evaluate the bids, you’ll sit down with your procurement partner to review offers based on price, contractual terms, reliability, and other relevant factors. 

6. Energy contract award: Once a decision has been made with the help of your procurement partner, you’ll award the energy contract to the supplier offering the lowest acceptable bid that also meets all of your requirements. 

Contract Management 

Once the bidding concludes, an energy procurement provider will assist and advise you in reviewing and negotiating energy supply contracts to ensure clarity, transparency, and compliance with regulatory requirements. 

As an example, here are a few common types of energy contracts: 

• Fixed price contracts: These contracts lock in a specific price for energy over a set period, providing stability and predictability for budgeting. The caveat here is that if market prices drop, you may miss out on potential energy savings. 
• Index price contracts: This type of contract is tied to a market index, such as the wholesale price of electricity or natural gas. When the market fluctuates, as it often does, prices will mirror that. While that can increase the savings potential when prices are low, it also exposes you to more risk if prices rise. 
• Block and index contracts: These contracts combine elements of both fixed price and index price contracts. Consumers purchase a fixed portion of their energy needs at a set price (the block), while the remainder is purchased at market prices (the index). 

Beyond these action items, a prospective energy broker should meet particular criteria to ensure you’re getting the best bang for your buck. That’s a broker who is experienced, knowledgeable, ethical, and transparent. 

The Benefits of Energy Procurement 

Beyond keeping the lights on, working with an expert team as part of an energy procurement service and strategy can bring bounteous benefits for your business and its bottom line. 

Cost Savings 

One of the primary benefits of energy procurement is the potential for cost savings. By strategically sourcing energy from the most cost-effective suppliers and negotiating favorable contract terms, organizations can lower their energy expenses and improve their bottom line. 

It’s important to note, though, that you should exercise caution if an energy procurer promises the lowest rates possible. The market is complex and ever-changing, and while the ultimate goal is to help you achieve your goals, that doesn’t always mean that you’ll pay the cheapest rate possible. 

Enhanced Load Forecasting 

This involves analyzing historical consumption data, weather patterns, economic indicators, and other relevant factors to estimate how much energy your organization will need in the future. It’s a critical component of energy procurement as it enables you to make more informed decisions about how much energy to purchase or generate to meet expected demand. 

An energy procurement partner can enhance load forecasting for your organization in several ways: 

• Expertise and experience: Procurers often have specialized knowledge and experience in various load forecasting techniques and methodologies. They can provide insights into best practices, industry trends, and emerging technologies to improve the accuracy of forecasts. 
• Data analysis: Access to a wide range of data sources, including historical consumption data, weather patterns, economic indicators, and market trends comes in handy when load forecasting and energy procurers often have access to such information. 
• Customized solutions: Customized load forecasting solutions that are tailored to the specific needs and requirements of your organization produce the best results. Your energy procurement partner should consider factors such as seasonal variations, peak demand periods, and customer behavior patterns to create more reliable forecasts. 

Risk Management 

Energy markets can be volatile, with prices fluctuating due to factors like supply and demand dynamics, geopolitical events, and regulatory changes. Effective energy procurement strategies can help organizations mitigate risks associated with price volatility by locking in favorable rates through long-term contracts. 

Environmental Sustainability 

According to the American Clean Power Association, there were 326 companies with renewable energy procurement agreements in place at the end of 2022. With increased pressure for governments to net zero emissions by 2050, this number will undoubtedly grow in the years to come. 

Working with an energy procurement partner who is knowledgeable in clean energy can contribute significantly to your environmental sustainability goals. By sourcing energy from renewable sources or implementing energy efficiency measures, organizations can reduce their carbon footprint and demonstrate their commitment to environmental responsibility. 

Energy Supplier Diversity 

Engaging with multiple energy suppliers through competitive procurement processes can promote supplier diversity and foster competition in the energy market, leading to improved service quality and innovation. 

Couple supplier diversity with a reverse auction bidding process, and you can expect to reduce your energy spend and receive reliable service. 

Regulatory Compliance 

Energy procurement strategies can help organizations ensure compliance with relevant regulations and standards governing energy sourcing, consumption, and emissions. This includes requirements related to renewable energy targets, emissions reductions, and energy efficiency initiatives. 

Why Partner with EnerConnex? 

EnerConnex’s optimized energy procurement process offers best-in-class support and expertise to find you the best rates available. We focus on three key areas to deliver the best results possible, including your: 

• Energy costs. 
• Energy consumption. 
• Energy usage. 

By focusing on price, quantity, and use, we serve as an unbiased supplier-neutral advocate so you can be assured that the price you pay for energy is what makes the most sense for your business. 

Learn more about our Energy Procurement Services and how we can deliver you the best rates on your terms. 

Understanding the Financial Impact of Energy Costs

by Erin McAfee | Mar 4, 2024 | Uncategorized

Helping CFOs in any industry to understand the impact of reducing electric and natural gas costs on revenue and gross profit is crucial. Let’s break it down.

1. Cost Reduction and Profitability:
   • Reduced Rates: When electric and natural gas rates decrease, it directly affects operational costs. Lower rates equal reduced expenses for energy consumption.
   • CFOs need to recognize that costs savings from reduced rates can contribute to higher profitability. Energy savings can be reallocated to other critical areas or reinvested strategically.
2. Revenue Implications:
   • Indirect Impact: While reduced rates don’t directly increase revenue, they indirectly influence it. Lower energy costs can lead to better financial health of an organization, which can positively impact overall revenue.
   • Operational Efficiency: Reduced energy costs allow companies to allocate resources more efficiently. This can enhance employee satisfaction, attract, and retain more customers and provide greater opportunities to increase revenue.
3. Gross Profit Considerations:
   • Cost of Goods Sold (COGS): Lower energy costs impact the COGS. As energy expenses decrease the COGS reduces, leading to higher gross profit margin.
   • Investment Opportunities: CFOs should view costs savings as an opportunity for strategic investments. Whether it’s upgrading equipment, expanding services, or improving infrastructure, these investments can enhance revenue generation.
4. Communication Strategies:
   • Educate Stakeholders: CFOs should communicate the impact of reduced rates to other stakeholders, including executives, department heads, and board members. Highlight how costs savings contribute to financial stability.
   • Quantify Savings: Provide concrete number. Show how much the organization saves due to reduced rates. CFOs can use financial reports and dashboards to illustrate this effectively.
5. Long-Term Perspective:
   • Sustainability. Emphasize that sustainable cost management is essential for long-term success Reduced energy costs align with environmental goals and demonstrate responsible financial stewardship.
   • Scenario Analysis: Conduct scenario analyses. Show how different rate changes impact the bottom line. CFOs can model various scenarios to assess potential outcomes.

In summary, CFOs need to recognize that reduced electric and natural gas costs are not just operational adjustments; they have a direct bearing on financial health, revenue, and gross profit. By effectively communicating these insights and leveraging costs savings strategically, all organizations can thrive even in challenging economic environments.

EnerConnex now offering Additionality RECs to clients as an alternative to complex VPPAs

by Erin McAfee | Feb 7, 2024 | Uncategorized

FOR IMMEDIATE RELEASE

                                                                                                                      FEBRUARY 07, 2024

Partnership with Zettawatts provides access to Additionality REC Market for EnerConnex Clients

Folsom, NJ— Today EnerConnex announced it is partnering with Zettawatts to deliver an innovative solution to clients that addresses increasing regulatory and investor scrutiny.

“Our clients are looking for a high-impact solution that is a simpler, low-risk alternative to virtual power purchase agreements.” said Tony Barnhart, Managing Director, EnerConnex. “We are now able to offer clients Additionality RECs – fixed-price forward contracts for renewable energy certificates from projects still under construction – to bring new renewable energy to the grid.”

In 2024, companies doing business in California, the EU and certain SEC regulated public corporations will be required to disclose both energy emissions as well as current mitigation efforts to meet voluntary decarbonization goals. Corporations like Microsoft, Google and Amazon determined to meet these objectives in 2024 are actively signing long term virtual power purchase agreements (VPPA) with projects that are under development. Unfortunately Virtual PPAs are highly complex financial instruments that expose corporations to the volatile wholesale electricity market and require sophisticated hedging to mitigate the risks.

Zettawatts’ Additionality REC Market eliminates the complexity and risk associated with VPPAs by allowing companies to enter into 5 or 10 year forward contracts to purchase only the RECs at a fixed price from projects under development.

Scott Case, Founder of Zettawatts added, “Corporations need expert guidance to navigate the  pressure from investors and regulators to mitigate their Scope 2 emissions from electricity. The EnerConnex team has deep experience delivering for their clients and we’re honored to partner with them to bring another innovative solution to their tool kit.”

The Additionality REC Market provides a suite of software solutions including:

AREC Planning & Budgeting: provides estimates for impact and additionality coverage.

REC Price Forecasts: guidance on REC prices over next 10 years for 20+ REC types.

AREC Purchase Offer & Booking: prepare a purchase offer including your own price per REC.

Marketing & Reporting: receive project marketing rights as well as additionality attestations.

REC Registry Tracking: accounts with all registries allowing for transfer, retirement and auditing.

About EnerConnex

EnerConnex is a leading energy advisory firm focused on energy procurement, renewables and sustainability. With access to one of the largest supplier networks, a proprietary pricing platform, and extensive industry experience, we tailor energy strategies based on our client’s specific needs and sustainability goals. EnerConnex is a wholly owned subsidiary of SJI– a $2.6B energy infrastructure company. More at enerconnex.com.

About Zettawatts

Zettawatts’ mission is to accelerate the deployment of new renewable energy projects by providing corporations a high-impact, low-risk way to back new U.S. projects to meet their sustainability goals. The company’s flagship product is the Additionality REC Market where sustainability leaders sign forward contracts to purchase 5 or 10 year strips of fixed-price Additionality RECs from projects currently under development. The AREC Market enables users to plan, budget, review REC price forecasts for 20+ voluntary & compliance RECs and make AREC offers and bookings. More at zettawatts.com.

For more information:

Erin McAfee – emcafee@enerconnex.com, Head of Marketing, EnerConnex

Tony Hudgins – tony@zettawatts.com, Corporate Sustainability Lead, Zettawatts

Reduce Your Carbon Footprint Through Carbon Offsets

by Erin McAfee | Jan 2, 2024 | Uncategorized

Carbon offsets continue to gain in popularity as a way to mitigate the environmental impact of human and business activities. Carbon offsets are a mechanism that allow businesses to compensate for their greenhouse gas emissions by investing in projects that reduce or remove an equivalent amount of carbon dioxide (CO2) or other greenhouse gas (GHG) emissions from the atmosphere. By purchasing carbon offsets and participating in carbon offset projects, businesses can take responsibility for their carbon footprint and contribute to the global efforts of combating climate change. Interested but aren’t quite sure where to get started? EnerConnex can assist with your  carbon offset procurements to help decarbonize your energy supply and reach sustainability goals.

We are currently able to assist with carbon offsets from different project-type pools.  Project type pool examples are National, Global and Forestry. National carbon offsets include carbon reduction values from carbon capture, renewable energy generation and energy efficiency. Global would be similar only beyond National projects, and Forestry carbon offsets contain carbon reduction vales from growing, improving, and preserving forestry projects. Through these project types, carbon offsets are a great option for businesses to help support decarbonization and reach overall sustainability goals.

EnerConnex has helped many businesses successfully purchase carbon offsets. A large printing company came to EnerConnex recently looking to participate in carbon offset projects. After looking into their energy usage and carbon footprint that they were outputting, EnerConnex was able to offset all of their natural gas consumption by purchasing about 300 metric tons of carbon offsets from a Climate-Ecomix project. Climate-Ecomix is a carbon offset product.

How Carbon Offsets Work:

Benefits of Carbon Offset Programs

•A lower-cost option for businesses to offset emissions rather than eliminating your carbon related activities.

• Allows businesses the opportunity to help offset emissions outside of their own company operations, such as company travel, supply chains, deliveries.

• Carbon offsets do not require any facility/equipment modifications.

• You help fund projects that reduce emissions, therefore contributing to a greener tomorrow.

Carbon offsets offer businesses an effective way to take responsibility for their carbon emissions, meet regulatory requirements, enhance their corporate image, manage risks, and contribute to global efforts to combat climate change. Contact EnerConnex today to learn more about offsetting your carbon footprint.