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Energy Purchasing

Novo Energy provides expert purchasing advice

for both commodity and non-commodity costs of energy contracts.

Using our extensive mix of expertise, experience and buying power we are able to offer a large number of market leading energy purchasing options and advice.

Our energy pricing team provides advice on the follow areas

“Advice on when to purchase.”

The wholesale energy price can vary significantly in a year, therefore it is vital that clients are aware of market movements so that the correct energy purchase price can be secured. Our in-house pricing team provide market reports and intelligence covering the main UK energy exchanges to advise when to purchase energy and the period that this should cover (such as 12 months, 18 months or 24 months etc).

“Advice on how to purchase.”

We are able to provide direct access to the wholesale energy markets for all clients. We use various methods to achieve volume maximisation such as grouping together similar client portfolios, which results in a wider range of purchasing options being made available to an individual client.

“Advice on non-commodity costs.”

We analyse all components of the energy cost and negotiate on all elements to ensure that our clients receive the best pricing.

Unique Strategies & Pricing Structures

It is increasingly important for UK businesses to implement an energy risk management strategy to manage the huge volatility in UK and European energy markets. Energy prices can vary by up to 45% in a year and with our expertise we will advise you on the optimum time to purchase your energy based upon pre-agreed budgets, risk appetite and pricing points.

The commodity cost of energy contracts is based upon the wholesale electricity and wholesale gas markets as well as renewable energy prices where applicable. The electricity and gas markets on a macro level are driven by fundamental economic factors such as demand, supply (capacity), risk and liquidity.

Therefore on a macro level Novo Energy believes the key to achieve a strong energy pricing point is to understand and develop historical patterns while also assessing the impact of possible emerging market risks. For example, UK electricity capacity may reduce to 2% in 2015-2016, political unrest in Egypt and Syria affecting oil prices (closely linked to UK NBP gas market) and downward pricing pressures such as the opportunity for UK Shale gas production. Novo Energy constantly analyse these economic variables to develop a commodity risk model that underpins our energy purchasing strategies.

Novo Energy provides expert wholesale market reports analysing the cost and movement of energy prices daily through live traded screens. Our pricing team predominantly cover the UK NBP (National Balancing Point) Gas market and the UK OTC physical power market (spot or over-the-counter market). This ensures our clients have the right information to take advantage of market volatility before the opportunity is missed. We can offer long term fixed contracts, flexible managed contracts (for large users) and group basket contracts.

Novo Energy provides unique structures to improve how clients purchase energy. The cost of energy is not only reliant on the movement in wholesale energy markets but also the manner in which energy is purchased. For larger volumes of energy and for longer delivery periods there are significantly more options available to apply downward pressure on end prices.

Novo Energy provides unique buying structures which improve how you purchase energy in order to maximise volume purchasing synergies either alone or via a group. Our large buying power and experience enables our team to offer the right strategy for your energy purchasing requirements.

Novo Energy negotiates on various terms of your energy contract to improve purchasing and with the aim to reduce risks. The pricing for energy contracts include non-commodity costs which have been steadily increasing.

Novo Energy negotiates on your contract costs to be satisfied that the lowest industry tariffs have been applied correctly. The type of contract offered also varies considerably with different terms, clauses and deposit requirements. Novo Energy have in-house legal counsel and significant experience of improving deposit terms and other contract terms to suit our client’s requirements.

Purchasing Options

Novo Energy provides three main types of purchasing options, for your gas and electricity contracts:

1. Fixed-Price

Fixed price contracts offer budget certainty and enable cash flow to be predicted within a given timeframe.

Novo Energy can offer any term from 1 to 5 years at a competitive market price based on the correct time to buy. Our pricing team has won several client auctions and open tenders against other energy brokers and energy suppliers due to our market leading products and prices. Novo Energy monitor energy markets daily to develop the optimum purchase time and volume for our clients.

For clients with multiple sites our portfolio management service will align all contract end dates to enable a company-wide purchasing strategy.

2. Flexible-Price Procurement

Flexi contracts provide exposure to the wholesale energy markets during a given time period. This provides clients with the ability to purchase energy several times during the contract term in order to take advantage of market conditions. A budget is agreed and daily wholesale markets are analysed to ensure energy trades are executed to achieve the target price. This product is suitable for our larger energy consuming clients.

Our flexi products include trigger points which we can set on a monthly basis for clients or groups over 20GW or on an annual basis for clients or groups over 2GW. Trigger points are an agreed percentage above and below a set budget. For an example a trigger point of 5% means when the market is 5% above or below budget we will inform you with an option to lock-in and a risk report.

3. Multi-Site and Group Baskets

This contract type provides a company wide solution and purchasing strategy. Multi-site or group clients are managed by Novo Energy to achieve a group negotiated price with direct access to the wholesale energy market.

Individual purchasing at the site level often results in purchasing energy from the SME tariff market with limited options and pricing levels. Novo Energy’s expert advisors will provide a clear 1 to 3 year implementation strategy to achieve short term and long term energy budgets. Our strategy will enable bespoke pricing that offers real value.