For many businesses, an energy tender can feel relatively straightforward: send your usage to a selection of suppliers, receive some prices and choose the cheapest.

In reality, a well-managed energy tender involves considerably more.

From preparing accurate consumption data and approaching the right suppliers to comparing contract structures and understanding what is actually included within the price, the tender process can have a significant impact on both your immediate costs and your longer-term energy strategy.

So, what actually happens when your energy contract goes out to tender?

Step 1: Understanding your requirements

Before approaching the market, it’s important to understand exactly what the business needs.

This includes reviewing:

• Current electricity and gas contracts
• Contract end dates
• Annual consumption
• Half-hourly data where available
• Number and type of sites
• Meter information
• Current costs and contract structure
• Future changes to the business or energy requirements

This stage is important because two organisations using the same amount of energy may require very different procurement strategies.

A business looking for complete budget certainty, for example, may approach the market differently to one prepared to accept greater exposure to wholesale market movements.

Step 2: Preparing the tender

Once the requirements are understood, the tender can be prepared.

Accurate information matters.

Incorrect consumption figures, meter details or contract dates can result in inaccurate pricing, delays or suppliers withdrawing offers later in the process.

For larger or multi-site organisations, this can involve consolidating significant amounts of information before the tender is issued.

The objective is to provide suppliers with a clear and accurate picture of what they’re being asked to price.

Step 3: Approaching the market

The tender is then issued to suitable energy suppliers.

Importantly, this shouldn’t necessarily mean approaching every supplier available.

Different suppliers have different appetites depending on factors such as:

• Consumption
• Industry
• Credit profile
• Number of sites
• Meter type
• Contract length
• Required product structure

A good tender process identifies the suppliers most appropriate for the organisation and creates genuine competition for the contract.

Step 4: Suppliers return their prices

Suppliers then assess the tender and return their offers.

This is where things become more complicated.

Energy prices can move throughout the day, meaning quotes may only remain valid for a limited period.

The offers themselves can also be structured differently.

One supplier might appear cheaper initially but exclude certain charges that another supplier has included within its price.

Simply comparing the headline unit rate doesn’t always tell you which contract represents the best overall value.

Step 5: Comparing like-for-like

This is one of the most important parts of the tender.

Each offer needs to be normalised so the organisation can make a genuine like-for-like comparison.

That means looking beyond pence per kWh and considering:

• Unit rates
• Standing charges
• Included and excluded non-commodity costs
• Pass-through charges
• Contract length
• Payment terms
• Volume tolerances
• Supplier terms and conditions
• Additional fees
• Potential future exposure

A contract offering the lowest headline rate isn’t automatically the cheapest or most appropriate contract.

The real question should be:

What is the expected total cost and risk over the lifetime of the agreement?

Step 6: Reviewing the wider market

Price is only one side of the decision.

Timing matters too.

Before committing to a contract, businesses should understand what is happening in the wholesale energy market and what could influence prices in the weeks and months ahead.

That might include:

• Gas storage levels
• LNG supply
• Weather forecasts
• Geopolitical events
• European demand
• Infrastructure maintenance
• Carbon markets
• Regulatory changes

Nobody can predict the energy market perfectly, but understanding the risks allows businesses to make a more informed purchasing decision.

Sometimes securing a contract immediately makes sense.

At other times, there may be a case for monitoring the market or considering a different procurement strategy.

Step 7: Presenting the options

Once the tender responses have been analysed, the organisation should receive a clear comparison of the available options.

Rather than simply being told which supplier is cheapest, decision-makers should understand:

What are the available options?

What will each potentially cost?

What risks does each option carry?

Which best fits the organisation’s objectives?

The final decision remains with the customer, but it should be based on clear information rather than simply choosing the lowest number on a spreadsheet.

Step 8: Contract checking and acceptance

Once a preferred supplier and product have been selected, the contract needs to be checked carefully before it is signed.

This includes confirming:

• Agreed prices
• Contract dates
• Sites and meters included
• Payment terms
• Contract conditions
• Any additional charges
• Renewal provisions

Energy contracts can contain important commercial terms that aren’t immediately obvious from the initial quotation.

This final check helps ensure that what is being signed reflects what was agreed during the tender.

The process shouldn’t end when the contract is signed

A successful energy tender shouldn’t be viewed as a once-every-few-years exercise.

Markets change, businesses change and energy requirements change.

After the contract begins, organisations should continue monitoring consumption, validating bills and reviewing their wider energy strategy.

This can identify issues such as billing errors, changes in consumption patterns, unnecessary capacity costs and opportunities to improve future procurement decisions.

How Enexus approaches energy tenders

At Enexus Energy, our role isn’t simply to collect prices from suppliers.

We work with businesses to understand their requirements, prepare and manage the tender, approach appropriate suppliers, analyse the responses and provide a clear like-for-like comparison.

Crucially, we also provide ongoing market insight to help clients understand when and how to buy, rather than focusing solely on the price available on a particular day.

Our approach includes:

• Reviewing existing contracts and consumption
• Preparing tender documentation
• Approaching suitable suppliers
• Negotiating commercial terms
• Comparing offers on a like-for-like basis
• Providing wholesale market insight
• Reviewing supplier contracts before acceptance
• Supporting the transition to the new contract
• Providing ongoing account and energy management support

The objective is simple: to make sure businesses understand exactly what they’re buying, why they’re buying it and whether it represents the right decision for their organisation.

Is your energy contract approaching renewal?

If your electricity or gas contract is approaching renewal, don’t wait until the final few weeks to start considering your options.

Starting the process early gives you more time to understand the market, develop the right procurement strategy and act when the opportunity is right.

Speak to Enexus Energy to arrange a complimentary review of your existing energy contracts and procurement strategy.