Procurement Practices Impact Energy Costs

March 20, 2012
Written by Lisa Brodeur
For all organizations, the person monitoring, procuring and managing energy for them should have a mindset that energy costs are completely controllable. In order to ensure that they are controllable, there are steps that this person can take to imbed this thinking into their everyday tasks.

Procurement practices focus not only on energy and water, but also on equipment and services. Look for the second article on equipment and service procurement on the Energy Edge site in the near future.

When talking about energy and water procurement, an organization needs to have a full understanding of its annual and monthly energy charges (including water). Along with the dollar figure, energy consumption figures need to be tied to production figures, to ensure improvement and prove efficiencies over time. Typically energy costs are made up of commodity, transportation and distribution charges. 

Every organization will then want to begin asking itself some questions in order to identify where savings can be found and at the lowest capital cost.

Track Energy with Production
Begin by determining what your energy spend is as a percentage of operating costs and how that translates into an annual energy performance measure such as GJ/kg or GJ/IB or m3/stem etc.

Next, do you have a full understanding of all your annual, seasonal, monthly and daily energy usage? Each of these parameters will provide you with a view of what your organization uses and when (which in the greenhouse industry is highly variable).

Have you explored the procurement options you have available to you in your province or jurisdiction for each of the commodities you consume? This includes transportation/distribution, suppliers, different rate structures, all of which can vary depending on where you are and when you consume your energy.

Do you have a variety of qualified suppliers available and what options does the supplier provide you?  Once this is understood, you will be able to determine which options are best suited to your operation and risk management style. 

Transport Matters
Many people focus on commodity and do not spend any time or effort to optimize the transportation and distribution charges.  What steps do you do undertake to minimize your annual energy costs in these areas?

Energy procurement always has more than one option at any time. This means there are often different risks that you incur depending on the option you choose. Do you understand the risks that you incur when you choose a particular option?

Effective procurement of energy requires constant measurement and awareness of usage and pricing.  Monitoring energy usage and reporting on usage vs. expected or contracted amounts will help identify the direction and next steps you will need to take as the year progresses.

You should always have a clear understanding of your current situation in regards to any commodity you are procuring and know that there are options to mitigate accumulated variances during the year. This will help to reduce the risk of your organization being caught unaware and facing any unnecessary utility or suppliers charges.
Lisa Brodeur is Quality Assurance Supervisor with 360 Energy in Burlington, Ont.

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