White Papers
Using Reverse Auctions for Energy Procurement
Reverse auctions are seen as providing a new tool for companies that helps them shave expenses and better document their procurement transactions.
Reverse auctions are becoming very popular because they are seen as being fair to all bidders and eliminating bias, thereby creating a more competitive arena. Competition between bidders drives the pricing down and buyers see this as extremely beneficial. The federal government is leading the way on reverse auction procurement and its use is growing rapidly.
Shale Plays affect on the Volatility of Natural Gas Prices
Based on last months New York Mercantile Exchange (NYMEX), Natural Gas prices are holding between $4.20 to $4.30 per MMBtu. Many factors come into play with when pricing commodities on NYMEX; however, all eyes continue to focus on the game changer – Shale Gas.
Shale continues to take center stage, albeit with mixed opinions, as compared to previous robust projections. These mixed opinions are adding some volatility to the direction of natural gas prices. Yet, it looks like North American producers are scaling back due to economics.
Introduction to Electricity Procurement
In deregulated natural gas and electricity markets, the commodity portion of your bill rules. It represents the largest percentage. Strategically, the best time to plan your purchase of an energy commodity is when its seasonal demand is lowest. Let’s look at the electricity market.
Demand Response - A Fast Growth Market
Demand Response (DR) has taken a higher profile as Constellation Energy signed an agreement to acquire CPower. CPower manages about 850 MW of DR capacity rights. Constellation Energy manages a similar amount. The acquisition would nearly double the company’s DR portfolio.
Constellation, in their press release, identifies synergies related to CPower providing additional systems, personnel, and helping to accelerate the pace of Constellation’s participation in this segment as primary reasons for the acquisition. Constellation stated it sees the demand-response market as maturing to the point that it functions like generation supply for reliability purposes.
Optimizing Your Competitivness with Fuel Switching
Utilization of your facilities’ capacity at the lowest possible cost for energy is obviously an important economic tool. The focus of fuel switching is the relationship between selecting your optimal energy source and not adding to the cost of production. It requires converting fuels priced in different units into energy expressed by a common unit of measure — the British Thermal Unit (Btu).
The main reasons for fuel switching are energy prices, loss of service from an operational flow order, and to reduce your carbon footprint by switching to a cleaner burning fuel such as natural gas. Fuel switching can also help maintain competitiveness. Your ability to switch fuels will work in your favor only when the conversion value between sources of energy is economically viable.