Energy buying used to be a matter of course for many businesses in the UK: just renew the contract, compare a few quotes, and go for the best unit rate. That approach no longer reflects today’s reality. As a consequence of recent years of market volatility, changes to network charges, and an overall increase in regulatory complexity, the true cost of business energy is dictated by so much more than just price. Timing, contract structure, risk exposure, and hidden charges now play a critical role in what businesses actually pay. This has led to a growing question among decision-makers: is it better to buy energy directly from suppliers or to use a specialist consultancy like E for Energy to manage procurement strategically?
Purchasing energy directly from a provider entails contract negotiations without the need for a middleman. The supplier gives a fixed price based on current market circumstances after reviewing your meter data, past consumption, and contract expiration date.
This procedure may seem effective to very small or infrequently used enterprises. There is only one point of contact, little analysis, and an obvious choice to be made. But the simplicity conceals significant drawbacks.
Only their own charges are quoted by suppliers. They don’t recommend if the time is favorable or benchmark prices throughout the market. Securing a contract is their goal, not minimising your long-term expenses or risk exposure. Consequently, companies frequently sign contracts.
The responsibility to determine the contract structure has shifted entirely to the business with direct purchase programs, which eliminates any independent evaluation of whether a fixed price contract is appropriate; what impact, if any, flexibility may have on reducing risk, and how standing charges and pass-through costs would affect the quoted unit rate. In most situations, businesses later find out that while the contract may have been easy to implement, it was not the most suitable for their needs.
An energy consultancy essentially looks at procurement from a different perspective: not selling energy, but how and when (and on what terms) a business can buy it.
At E for Energy, procurement starts by understanding how energy is actually used.
Consumption patterns, operating hours, peak demand exposure, and site-specific factors all influence which contract structure makes sense. This analysis dictates whether a fixed, flexible, or blended strategy is the best fit.
Access to various suppliers means genuine market benchmarking is allowed, rather than relying on a single quotation. Price is evaluated with contract length, risk profile, and budget certainty. Importantly, E for Energy goes beyond unit rates to isolate those costs that typically inflate bills, such as standing charges, network pass-throughs, VAT eligibility, and Climate Change Levy exposure.
Support from consultancy does not stop once the ink has dried on a signed contract. Ongoing monitoring will also ensure procurement decisions remain aligned to market conditions and business needs to avoid energy becoming a ‘set and forget’ cost item that quietly escalates over time.
Even though it is quite obvious, it is rarely the primary cause of overall expenses.
Standing fees can differ greatly between contract formats and vendors. Although they may vary from year to year, network fees and pass-through costs are frequently accepted without question. Unreviewed Climate Change Levy charges or improper VAT classification might result in significant, ongoing expenses that go unreported.
These components are rarely fully modelled when companies purchase straight from suppliers. Headline price, not total annual spend, is the basis for decision-making. On the other hand, an energy consultancy determines which combination of rate, structure, and time results in the lowest overall bill after first determining the genuine cost.
Because of this, contracts that initially seem more costly frequently perform better over the course of their whole term than those that appear less expensive.
Energy markets are unstable by nature. Companies that purchase directly from suppliers usually set their prices at one point in time. Regardless of future price movements, the cost is set for years if that time falls during a market peak.
Risk control and flexibility are introduced through consultancy-led procurement. While flexible or hybrid techniques enable purchasing to be stretched out over time, fixed contracts can still offer budget predictability. This prevents all consumption from occurring at an unfavorable time and lessens exposure to abrupt spikes.
The use of forward purchasing, phased buying, and continuous marketing monitoring enables businesses to better respond to rather than simply react to the changing conditions of the marketplace. In energy-intensive operations, these strategies may affect a business’s margins through stabilisation or through the introduction of unexpected costs.
This means that when companies procure their energy, they no longer just treat it as a purchasing activity, but as part of their overall financial risk management strategy.
Expert monitoring is beneficial for any organisation, but the value of consulting rises dramatically with complexity and scale. The best returns are usually seen by businesses that spend more than £25,000 to £30,000 annually on energy.
The difficulties faced by hotels, assisted living facilities, manufacturing, data centers, and multi-site operators go beyond contract renewal. Risk is compounded by peak demand fees, different operating hours, multiple meters, and regulatory expenses.
Small inefficiencies in these settings can soon result in significant financial losses.
Energy purchase is not an administrative chore for these companies. Profitability and cash flow are directly impacted by this strategic choice.
In some instances purchasing direct from a source is appropriate, eg, micro-businesses that have predictably low long term consumption or a need for only a temporary presence in the location; these businesses generally do not need to implement a complicated purchasing process.
Nevertheless, even in these instances, issues such as poorly constructed contractual agreements, inaccurate tax classification, or excessive recurring fees may offset much of any cost savings anticipated by the micro-business. In many instances, having an independent assessment will help identify any mistakes before they occur and to remain unnoticed for many years.
When choosing whether to purchase your energy directly or work with an energy advisory firm (consultant), the decision comes down to how a business perceives and treats energy. Purchasing direct is a transactional relationship; you purchase the product when it is available and when you need it. When you work with a consultant, it is a more strategic relationship; they manage cost, risks, and the overall structure of your energy future for you.
As energy continues to evolve into a variable commodity—not a “fixed” cost (service)—there are many businesses that fail to see this and continue to treat energy procurement the same way they always have. On the other hand, those who treat energy procurement strategically have greater control, stability, and visibility over one of their most unpredictable costs.
The big question should no longer be “who provides the cheapest/safest energy?” Instead, the focus should be on “who provides my business with the tools necessary to purchase energy in the most effective manner possible (including timing, structure, and risk)?”
That is where significant long-term energy savings will occur; this is what defines “sustainable savings.”