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Do you find yourself thinking more and more about your operation’s energy supply? You’re not alone. Energy choices are proliferating thanks to deregulation, innovation, and falling prices of alternative energy.i  Your management of these choices can influence your budget, as well as customer perception of your operation.

Businesses that once relied solely on utilities for electricity and natural gas now have many cost-effective alternatives.

If you live in a state that offers retail choice, you can select from competing electricity and natural suppliers, or choose to stay with your utility. Alternatively, you can generate electricity onsite, regardless of your state’s deregulation status, or put together a mix of these supply options to meet your budget and business goals.

All of this choice can create a new level of complexity for managing your energy supply—but also offers you more control over your energy resources and an opportunity for to get more from your energy budget.

How can I manage the complexity of energy supply?

Supply Side Energy Management

The goal of supply side energy management is to organize this complexity. While demand side energy management focuses on saving energy, supply side management involves choosing energy resources and then orchestrating them in the most cost-effective configuration for your operation.

When coordinating the energy resources available to your business, timing is a critical consideration. Energy prices change almost constantly and will largely determine which mix of energy resources you should use at any given time.

For example, on a hot afternoon when demand on the electric grid is high and prices are edging upward, it may be cost-effective to use energy from your onsite solar panels than from the grid. Or perhaps you're facing the opposite circumstances: Grid prices are low, so it’s best to buy electricity and store the energy generated by your solar panels in your onsite battery. You then can use the stored energy at night or when electricity prices rise.

Supply side energy management also requires thinking for the long term when selecting which energy resources best suit your organization—for example, when choosing your electricity and natural gas supply products or types of onsite resources.  

What do I need to know?

A lot goes into building and managing a supply side management strategy for your business. It requires an understanding of your energy needs—when, where and how your facility consumes electricity and natural gas, and perhaps most important, how much it consumes.

You’ll also need a knowledge of market trends, both long-term and short-term, as well as supply availability and pricing forecasts for the coming weeks, months and years.

Finally, tailor your portfolio to your organization's risk tolerance, budget goals, reliability requirements and sustainability goals.

What are my supply choices?

As energy suppliers develop sophisticated new energy products, prices fall for green energyi and technologies emerge to monitor energy pricing and automate supply decisions, more resources and strategies are becoming available to help you control your energy budget through supply side management.

Here are some core types of supply you may consider.

ElectricityNatural GasCompetitive products for electricity and natural gas supply

Several states offer businesses retail choice. This allows you to compare rates, services and contract terms so you can choose a contract that’s best for your business. Your regional utility continues to service the transmission and distribution portion of your energy bill—the wires, poles, pipes and equipment responsible for delivering the energy.

Not all suppliers are equal, so be sure to find a knowledgeable one that understands your operation and looks at your whole energy picture. For example, your supplier should consider your risk tolerance and structure your products accordingly.

Remember, smart energy management is strategic and should be customized to your operations; it is not an off-the-shelf purchase.

Group Purchasing Group Purchasing

An experienced retail energy supplier may also arrange for your participation in group energy purchases. Economies of scale can sometimes drive down costs, so you may benefit from contracting for supply in bulk. Your supplier may be able to aggregate your sister companies or subsidiaries for group purchases, or perhaps work with your industry’s trade association to offer a group price.

Solar Energy IconSolar Energy

Solar energy has experienced exponential growth.ii Solar pricing is falling, making it increasingly competitive with other supply resources.iii Add to that its environmental benefits—solar creates no emissions—and the reasons for its popularity become clear, especially for companies that are striving to meet sustainability goals.

Battery StorageBattery Storage

A relatively new option but considered a game-changer, battery storage systems allow you to produce energy onsite and then store it for later use. Businesses are beginning to couple solar with storage so that if grid power fails, they can draw from the batteries to keep the lights on.

Even more cutting edge, some businesses are using batteries to derive a new revenue stream. When the local grid needs resources, businesses direct their stored battery energy away from their facility and into the larger grid, and grid operators and utilities pay them for this service. Some operations are even using battery energy stored in electric vehicles for this purpose.iv

Onsite GenerationOnsite generation

In addition to solar, other types of onsite generation may suit your supply strategy. If you’re situated in a windy area, wind turbines may work for you. Those with a strong need for not only power, but also heat or steam, may consider a combined heat and power unit. If your business is vulnerable to large financial losses from even a brief power outage, you may benefit from adding diesel or natural gas-fired back-up generators onsite.v

Fuel Oil Conversion Fuel oil conversion

If your operation still uses fuel oil for heating, consider switching to natural gas. Before making this decision, consult with an experienced energy provider or engineer. There are several factors to consider, including the financial benefits and cost effectiveness of the available fuel 

As businesses are challenged to get more with often shrinking budgets and fewer resources, it's best to seek guidance on your supply-side management strategy from an experienced energy supplier. Direct Energy Business can offer the energy market expertise and the breadth of supply options to help you get the most for your budget—and to buy less of what we sell. Our team of energy advisors will work with you to determine supply-side management strategies that can help you accomplish your goals, and help you track your progress toward those goals. Our full range of supply-side products and services include:

To learn more about Direct Energy Business and how we can help you buy less of what we sell, visit our Energy Management Solutions page.

[i] Lawrence Berkeley National Laboratory (LBNL) “U.S. Distributed Solar Prices Fell 10 to 20 Percent in 2014, with Trends Continuing into 2015,” August 12, 2015

[ii] Deloitte Center for Energy Solutions, “US Solar Power Growth through 2040: Exponential or Inconsequential?” page 4, September 2015

[iii] Deloitte Center for Energy Solutions, “US Solar Power Growth through 2040: Exponential or Inconsequential?” page 10, September 2015

[v] Crain’s Chicago Business, “The price of failure: Data-center power outage cost Sears $2.2M in profit,” June 4, 2013

[vi] Direct Energy Business, “Simplifying the Fuel Oil Conversion Process,” October 15, 2014


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