There’s never been a more important time to stay ahead of the curve when it comes to energy for your business.
The energy market is always subject to fluctuations, but prices industry wide are on the rise – and Australian businesses are feeling the pinch.
Luckily, there are several tactics businesses can use as part of their energy strategy to secure their supply and protect their bottom line.
So, today we’re talking about forward contracting; what is it, what are the benefits, and how can it help your business power forward in today’s ever-changing energy landscape?
What is forward contracting?
Forward contracting involves businesses securing their future energy supply at a predetermined price, for a specified period of time. The price is based on the conditions of the ASX energy futures market at the time of contracting.
(This is a separate entity from the wholesale market, in which prices change every 5 minutes. The wholesale energy market focuses on the physical and immediate trading of energy commodities, while the ASX energy futures market forecasts prices looking ahead, and is used to trade future contracts.)
Most importantly, on a forward contract, prices won’t increase if the market spikes during the contracted period, which means customers have a level of protection from market volatility.
What are the benefits of forward contracting energy for businesses?
- Hedging against price volatility
The obvious advantage of forward contracting is the ability to shield businesses from price volatility on the ASX futures market. By locking in a forward contract, businesses have a safeguard against sudden price increases and can accurately budget for their bills. And in a market renowned for volatility? Having peace of mind about your energy costs is priceless.
- Cost savings
Protection against price volatility can also offer significant savings for businesses. Securing a long-term contract at a competitive rate can help boost your bottom line, allowing you to reinvest cost savings in other areas of the business and turn your energy contract into a competitive advantage.
- Risk mitigation
There are many different factors that can affect the wholesale market, from geopolitical events and supply disruptions, to changes in regulatory policies and extreme weather. Forward contracting protects your business from the fallout of these energy risks, ensuring you can maintain operational efficiency.
How Flow Power is making forward contracting flexible
We can all agree that protection from price spikes is a benefit for businesses.
However, that same protection could also leave you paying a higher rate if the market drops – meaning you could be locked into a long-term contract, paying more for energy than you need to be.
We know you don’t have the time to analyse the market for the ‘right’ time to contract. You need a provider who can do the hard work for you – and pass on the savings.
That’s why we created the Active Option. Flow Power’s unique add-on, helping power up your plan.
Enjoy a flexible forward contract that gives you the security of a fixed base rate, with the power to periodically move to a lower base rate if the market drops.
It’s a contract that offers the best of both worlds for your business – see how these businesses have saved by purchasing the Active Option.
Ready to power forward with a flexible forward contract for your business?
Don’t miss out on energy savings. Opt-in to the Active Option – only on Power Active.
Speak to an energy specialist today to find out how your business could benefit from our smart energy solutions.
? 1300 08 06 08 (within business hours)
Alternatively, you can submit your questions through our website contact form here.
