Energy Supply Policy Guidance
After corporate strategy is optimized, then a program to guide the procurement of energy needs to be developed. BMA's principal led the process of creating this guidance document for a major regional retailer with over 300 outlets and several manufacturing and warehousing campuses.
The energy industry is exceedingly complex, the offerings from competitive suppliers can be difficult to compare, but choices have to be made. The most expensive choice is to buy power without a plan. Due to the enormous financial commitments required to buy long-term energy, it is ultimately a risk management issue that must be guided by a formal policy that is endorsed by senior leadership:
- A critical part of the policy is a corporate risk profile that prioritizes the client’s position on such competing issues as lowest rates versus budget predictability, versus price volatility, versus spot market risk appetite, etc.
- The policy needs to set goals, describe the corporate approach to energy procurement, number and types of suppliers, define who within the company is empowered to make power purchase decisions, and sets criteria for approval.
- There are many reasons why a large consumer might want to include renewable energy in their power portfolio - customers may expect it, senior management may view it as a sustainability imperative, financial risk managers may be drawn to the long-term fixed fuel prices, marketing may see a public relations value, or government regulations may require it. The motivations, technological and financial choices, and contracting issues all need to be understood. The policy needs to make clear the corporate position on how much and what type of renewable energy is desired.
Typical Scope of Services:
- Assistance in identifying key staff who will assemble the policy, and exchange of background information prior to the planning session. Energy Management can play a leading role, BMA can facilitate, but serious guidance from senior leadership and corporate risk management is required.
- Facilitation of strategic planning session, including asking questions, identifying areas of additional opportunity, and ensuring that the policy is complete.
- BMA’s deliverable will be a summary of notes from the planning session, for the client’s use in preparing a draft policy. Following review by client and BMA, the final policy will be ready to present and implement.
- This task can occur over a 3-month period, and fees can be negotiated to suit the client’s needs, either on an hourly or daily basis.