15 June 2026
Energy is likely to be one of the biggest overheads your business has to deal with. That means securing the right price and the right terms on your business' gas and electricity is crucial. However, with current market conditions, fluctuating prices and other factors to contend with, energy procurement – and the elements that go into understanding it – is a major consideration for any business to undertake.
That's where a defined procurement strategy comes in. A must for any energy-intensive organisation, effective energy procurement can be hugely beneficial, helping to mitigate risk while easing certain operational pressures throughout your organisation.
With an extensive marketplace offering a range of bespoke and packaged options, the variants to consider are substantial. We’ve assembled this guide to help you develop an effective energy procurement strategy that’ll help you navigate towards the most suitable energy agreement for your business.
Why is an energy procurement strategy important?
It's easy to assume that energy procurement is simply about getting the best price, but it's also a matter of ensuring the product is the right fit for your organisation. By this, we mean your strategy should be one that delivers value and supports the company's strategy and risk management requirements.
At the planning stage, you should focus on gathering and assessing information on tariffs, contract structures and elements that can help manage risk. Such information not only informs strategy, but will also provide useful context for the energy suppliers you choose to work with.
Although planning is mostly related to company requirements and energy expenditure, it also allows you to do the following:
An energy procurement strategy should evaluate relevant internal company information, its budget requirements, any legislation or policy requirements, and supply and consumption information – more on this later.
A step-by-step guide to energy procurement strategy
Step 1: Analyse the current situation
Before you get started on developing a procurement strategy, you need to work out what aligns best with the objectives of your company. For instance: what do you require in the future? What areas of the business need improving?
To achieve these objectives, you need to know the risks and market position associated with your business. Here, you'll have to consider various factors such as market volatility,stakeholder management, and administrative capacity for risk management.
Step 2: Prioritise what matters most
Once you've evaluated your situation, documenting the link between procurement strategy and corporate goals is your next move. Although this will differ from industry to industry, it's a good idea to gather details on your company's corporate goals before mapping procurement objectives to each one.
Step 3: Create trust among suppliers
A massive part of the energy procurement process is the relationship you'll have with your suppliers. The way you deal with suppliers plays an important role in increasing operational and cost efficiencies, so building trust and credibility with any suppliers you work with is crucial.
Vetting vendors ahead of time will also help give you an idea of price, reputation, customer service and turnaround.
Step 4: Create measurable targets
Businesses should know if their targets are specific and measurable. Having a consistent method of tracking key metrics and then linking these metrics to the procurement strategy lets you more effectively track progress over time.
Step 5: Plan your approach to market
Your approach to market determines the tender process, your pricing mechanism and the type of contract you'll need for certain projects. Here, you'll also consider the delivery model, the nature of the work, any risks involved and the anticipated timeframe for delivery, along with deciding on a contract type that ensures high-quality, cost-effective outcomes.
Key things to consider when developing your strategy
Budget requirements
Your organisation’s budget can help inform decisions surrounding the length of contract as well as whether you opt for fixed or flexible energy procurement. A balance between savings and budget certainty is important, but it can be difficult to maximise both at once.
For some organisations, the cost at which energy is purchased might affect their competitiveness. For instance, if you determine client rates based on the price you buy energy for, you could be more interested in chasing the market for the best price and opt for flexible procurement as a result.
On the other hand, you may be looking for stability instead. If you have a long-term budget, the day-to-day price of energy may not be much of a concern – as long as it’s within budget and fixed for the contract duration.
Every company will have different budget requirements; understanding your risk profile can determine the right fit.
Legislation and policy
If there are any internal or external legislative or policy requirements that could affect you and your procurement activities, then these also need to be considered.
For corporate energy users with policies geared towards sustainability, there's a strong carbon intensity element to their purchasing strategy. In developing a strategy for procurement, sustainability and carbon factors are big drivers, and so their procurement activity must remain in line with whatever sustainability-related corporate objectives are in place.
This means that, when such businesses develop a procurement strategy, things like outcome-focused deliverables (such as reducing CO₂ ) and engaging with suppliers to ensure they better understand their corporate customers' sustainability approaches become significant factors to consider.
Supply and consumption data
You'll need up-to-date and accurate supply and consumption data so that suppliers can price up an energy contract. Doing so increases the accuracy of pricing as well as the success of the tender.
For best results, you should provide the supplier with information for the last 12 months of consumption, along with a forecast of future use if you're expecting a noticeable difference to your previous usage.
Once this information has been gathered from within your company, you'll have a clearer view of the preferred contractual arrangements and purchasing strategy. This will then allow you to create a list of requirements, which may include:
Preferred principle terms
Preferred payment methods
Billing and transparency requirements
Length of contract
Fuel mix
Volume tolerance
Reporting and account management preferences
Contract type (e.g. fixed, flexible, full assured)
Energy procurement strategy FAQs
What is the best energy procurement strategy ?
The right energy procurement strategy will depend on your organisation’s specific needs. Fixed contracts can be a strong option for businesses looking to minimise risk and maintain predictable costs over the term, offering protection from wholesale market volatility. For organisations with a greater appetite for risk and the capacity to engage with the market more actively, flexible contracts can provide opportunities to respond to price movements. Ultimately, the key is to understand your requirements, available resources and risk tolerance, and ensure your approach aligns with how your business operates.
What is the best energy procurement strategy to manage risk?
As with any procurement decision, the right approach depends on what best fits your business. Developing an effective strategy starts with understanding the role of risk within your organisation and how much exposure you are prepared to manage.
For SME businesses, where budget stability is often the priority, there is typically less scope to take on market risk in pursuit of potential gains. This is particularly true for organisations operating under fixed‑price sales agreements, where increases in energy costs cannot easily be passed on to customers.
Larger, energy‑intensive organisations may adopt a more varied approach. Many use fixed contracts to protect profit margins and reduce exposure to price spikes, particularly where cost certainty is critical to financial performance. At the same time, businesses that are more active in managing their energy spend may look to flexible contracts, allowing them to engage with market movements and potentially secure more competitive pricing over time.
What is the difference between fixed and flexible energy procurement strategies?
The key difference between fixed and flexible energy procurement strategies lies in how costs are managed and how much exposure a business has to market movements over time.
A fixed contract provides price certainty by locking in energy costs for the duration of the agreement. This can make budgeting more straightforward and offers protection against upward price movements in the wholesale market. However, it also means businesses won’t benefit if market prices fall during the contract term.
A flexible contract allows organisations to purchase energy in stages throughout the contract period, rather than fixing all costs upfront. This approach enables businesses to respond to market conditions – for example, fixing portions of their energy at different times. In practice, this can mean segmenting expected consumption and securing some volumes in advance, while leaving others exposed to market pricing. The overall cost then reflects a blended average based on when and how energy is purchased.
Rather than one approach being inherently better than the other, the choice depends on how a business prefers to balance cost certainty with market exposure. For organisations with the capacity to monitor and engage with the energy market, a flexible strategy can offer greater control. Others may prioritise stability and predictability through a fixed approach.
Whichever structure is chosen, it’s important to understand how and when costs are fixed, and what elements may still vary. Taking the time to review contract terms carefully ensures the strategy in place genuinely aligns with the organisation’s operational needs and appetite for risk.