For a multinational enterprise, the acquisition of energy has shifted from transactions taking place in the back office to an increasingly strategic function influencing cost neutral and stable energy prices, sustainability, and brand equity. As global corporations deploy operations in diverse markets, the question of buying effectively has shifted from ‘what’ to ‘how to’ combine procurement across geographies.
The UK, in many ways, presents both an opportunity and complexity. The UK energy market is amongst the most competitive and deregulated energy markets in the world, with flexible contract structures, transparent pricing and increasing renewable capacity. However, the UK market is also very volatile with wholesale price fluctuations, geopolitical pressures and shifting regulation.
On the corporation level, for multi-sited energy portfolios across geographies, making proprietary energy market decisions translates into balancing both global strategy with the local. To that end, we will identify how multi-national organisations can continue to create structured procurement strategies that create social value and sustainability, positively affect price volatility, and ultimately achieve long-term pricing stability with energy purchases.
Prior to undertaking a procurement strategy, it is important to understand the factors that make the UK market unique.
The UK energy sector is 100% liberalised, and therefore provides various businesses hundreds of suppliers to choose from. While this competition enables greater opportunity, it also adds complexity.
Key characteristics include:
• High levels of price volatility due to global gas price impact and renewable intermittency,
• Non-commodity cost detailing such as Transmission Network Use of System (TNUoS), Distribution Use of System (DUoS), and the Climate Change Levy (CCL),
• Strong regulatory framework from Ofgem, including decarbonisation and carbon integration.
• The demand-side programmes in place to incentivise load flexibility and efficiency.
There are implications for global procurement teams: the UK should not be regarded as a “template” market and requires contract design and ongoing monitoring to reflect its unique market.
Strategy #1 — Achieving the Right Balance between Centralised & Decentralised Procurement
Multinational firms often grapple with the choice of centralised and decentralised energy buying.
• A centralised model effectively provides procurement power and global policy alignment.
• A decentralised model enables regional teams to take more responsive action in line with market and regulatory changes.
Best-in-class UK organisations often implement a hybrid model — a centralised strategy sets the high-level principles of procurement (e.g. risk appetite, sustainability agenda, reporting standards) placed under the execution of local, energy procurement specialists, based on real-time market intelligence.
This approach allows multinationals to store the centralisation of control and procurement whilst maintaining flexibility and responsiveness at the local level.
Strategy #2 — Selecting the Proper Contract Type
The structure of the contract can either significantly improve your procurement efforts, or be a detriment to them. The U.K. has several model types and structures available, each relevant for different variability of corporate risk.
• Fixed contracts provide a set unit rate throughout the contract term. This provides certainty and predictability, as well as budget control.
• Flexible contracts allow for buying energy in tranches, allowing you to take advantage of market dips and spread the price risk across time.
• Pass-through contracts breakdown costs by separating out non-commodity costs from wholesale costs. This provides clarity throughout the process, and allows for adjustments to costs charged by the network and policy.
Any global procurement leader must also consider your corporate finance policies when evaluating these structures. For example, if your treasury department is concerned about predictability, a fixed approach may be a better fit. If your finance group is willing to accept some risk for potential savings, a flexible approach with expert oversight will often perform better over time.
Strategy #3 — Implementing Data and Technology into Forecasting
Energy procurement is now dictated by data, not instinct.
Digital tools are leveraged by companies to accurately forecast consumption, model pricing scenarios, and overlap procurement timing into the market cycle.
In the UK intelligent meters and half hourly data are standard which can then be integrated into global dashboards.
Forecasting tools built on AI can help forecast peaks in usage, detect areas of use inefficiency, and predict the outcome of contracts under different pricing strategies.
For international portfolios, aligning UK data with global systems is one way to ensure comparability in reporting and allow for cross-regional comparisons in energy intensity, carbon performance, and trends in cost.
Strategy #4 – Bringing Together Sustainability and Renewable Procurement
For most multinationals, cost is no longer the primary indicator of success. Energy procurement is now entangled with ESG commitments and a march to net-zero.
In the UK, companies can achieve their sustainability objectives in a number of ways:
1. Buying renewable electricity (green tariffs or REGOs – Renewable Energy Guarantees of Origin)
2. Engaging in Corporate Power Purchase Agreements (CPPA) with renewable generators to get long-term price stability and a verified green supply
3. Investing in on-site generation, like solar PV or Combined Heat and Power (CHP, even when it will take some time on payback)
All of them will reduce the carbon emissions and offer a hedge against energy theft from fossil-fuel-derived energy in a more volatile global market.
This gives businesses a level of comfort when procuring energy that is aligned with corporate carbon-reduction goals whether it is SECR, ESOS or the Science-Based Targets initiative, which supports verifiability to global standards.
Strategy #5 — Managing Portfolios of Multi-Site, Multi-Meter
Multinational companies typically have many (dozens, sometimes even hundreds) of sites in the UK with different meter types, tariffs, and suppliers. Without an organised approach, this complexity quickly turns into excessive administrative burden, and inconsistent pricing.
The answer to these issues is to consolidate the portfolio. By rationalising suppliers, synchronising contract end dates, and leveraging consolidated billing, large businesses can take control and simplify auditing.
Sub-metering and advanced monitoring provide clarity about how the various facilities operate and detect tolerant efficiencies of assets or excessive load operations. An experienced energy partner like E for Energy would be able to standardise procurement and reporting across all sites, which allows for data comparability and operational efficiency.
Strategy #6 — Risk Management and Financial Hedging
The UK has one of Europe’s most liquid energy markets but, as a result, one of the most volatile. Having a structured approach to risk management is critical. Common approaches include Block purchasing: buying chunks of electricity over time, levelling your market exposure. Trigger buying: automatically buying once you reach a price trigger.
Portfolio hedging: managing your concentration risk, including both the duration of contracts and the diversity of suppliers. What is most appropriate will depend on your organisation’s financial philosophy. Align your energy risk management with your corporate treasury policy; treat energy as a managed asset class rather than a cost of doing business.
If you engage with energy risk managers, a multinational company can turn volatility into opportunity through market dips and market spikes, or, switching to fixed prices, protecting your company from volatility.
Strategy #7: Staying on Top of Compliance and Regulations
Buying energy in the UK is not only about getting the best price. Businesses have to make sure that they are complying with a whole range of rules and regulations, including the Climate Change Levy (CCL) and special VAT arrangements, all the way through to reporting obligations like ESOS (Energy Savings Opportunity Scheme) and SECR (Streamlined Energy and Carbon Reporting).
Failing to meet obligations opens the door to potential fines and reputational damage to your business; this is even more of a consideration for listed companies that have committed to the rigours of environmental, social, and governance (ESG).
That’s why it’s smart to team up with an energy partner who keeps an eye on all these regulations. They can help make sure your energy buying plan stays compliant, ready for any audits, and in line with how policies are changing, both here and around the world.
Strategy #8 — Work with an Energy Advisor that Understands the UK
Even with in-house capabilities, multinationals will require local advice and expertise from specialists.
An energy advisor with experience in the UK, a consultant can be relied upon to connect the dots for multinational organisations between global issues and local markets.
An organisation like E for Energy will assist multinational organisations with:
• Providing benchmarks and tendering supplier contracts,
• Managing flexible purchasing portfolios,
• Supporting renewable sourcing as part of procurement, and
• Providing clear reporting in line with corporate ESG commitments and standards.
Working with the right advisor, procurement and energy go from being a reactive spend to a strategic asset, supporting profitability, compliance and sustainability.
Final Thoughts
Multinational enterprises face both challenges and opportunities in the UK energy market. While transparency, competition, and renewable capacity can translate into value, there is one caveat, they must have the right approach.
It is about finding a balance, global alignment and execution with local knowledge, cost center with sustainability, risk with flexibility.
A formalised supply chain will help you in not just purchasing energy, but managing your exposure, supporting your organisation’s corporate reputation, and constructing sustainable savings that can be measured.
E for Energy enables multinationals to acquire energy in a strategic way, globally aligned and executed at a local level, where each kilowatt used and every pound spent is optimising long-term value.
Because in a globalised economy, energy is no longer simply a commodity it is a pillar of your competitive strategy.