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The Power of Energy Pools

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When small and medium-sized businesses work together, they can significantly trim energy costs.

Electricity buying pools are one increasingly popular option for businesses to benefit each other while cutting energy expenditures. They are particularly viable option for businesses seeking greater control of their electricity costs, particularly in volatile energy markets. 

“Aggregation” is often used to describe the process by which individual electricity users form an alliance for energy purchases to leverage the buying power of the group’s aggregate load. In a buying pool, companies band together to combine each of their smaller energy purchases (i.e. their loads) into a single larger load. The most competitive electricity rates are available through purchases in the wholesale market, but — because wholesale electricity is sold in large blocks — only businesses with large electricity loads/requirements can typically take advantage of the value offered by these large-scale purchases.

To take advantage of wholesale market purchases, a business or multi-facility enterprise must have peak demand of 1 megawatt (MW) or greater. Because most businesses, institutions and small manufacturing facilities typically consume less energy than the minimum threshold, the opportunity to make wholesale market purchases is a challenge—if not an impossibility. However, by joining a buying pool, smaller businesses have the opportunity to take advantage of larger wholesale purchases that, when broken down by pool participants, may yield a lower rate than what is available to a small business seeking electricity supply pricing on its own.

Direct Energy Business has published a new, in-depth primer to help businesses gain a better understanding of electricity buying pools. The guide — "Energy Pools: There's Strength in Numbers" — overviews the basic concepts behind pricing for pool members, the characteristics of success, and considerations for selecting a pool program. 

For a deep dive into how energy pools can help small and medium businesses save on energy costs, download our guide "Energy Pools: There's Strength in Numbers."

Posted: September 24, 2015