For many organisations, energy procurement is often treated as a routine operational task. Contracts are renewed, prices are compared, and decisions are made based primarily on headline rates. However, with rising energy costs, increasing market volatility, and growing pressure around sustainability and compliance, procurement decisions are becoming far more strategic.
Whether you are a school, SME, or larger enterprise organisation, the way you procure energy can have a significant impact on operational costs, long-term budgeting, and overall business resilience.
In this blog, we explore the main energy procurement options available, the advantages and disadvantages of each approach, and why reviewing procurement strategy is becoming increasingly important.
Over the past decade, organisations have experienced substantial fluctuations in energy pricing. In many cases, businesses and schools that once viewed utilities as a predictable overhead are now facing increasing financial pressure from energy volatility.
At the same time, organisations are also being asked to demonstrate stronger environmental performance, reduce carbon emissions, and improve operational efficiency. As a result, procurement is no longer simply about securing the cheapest tariff available today. It is about balancing cost, flexibility, risk management, sustainability goals, and long-term operational planning.
For schools in particular, rising utility costs continue to place pressure on already stretched budgets. Energy is one of the largest controllable operational costs across many education estates, which is why reviewing procurement strategies alongside broader building efficiency measures is becoming increasingly important.
One of the most common procurement approaches is a fixed contract.
Under this arrangement, the organisation agrees a unit price for gas or electricity over a defined period, typically between one and three years.
For many organisations, fixed contracts remain attractive because they provide financial stability and reduce exposure to market volatility.
Flexible procurement allows organisations to purchase energy in stages over time rather than fixing the entire contract at once.
This approach is often used by larger organisations with higher energy consumption, although some smaller organisations are beginning to explore flexible purchasing models through procurement frameworks and energy consultants.
Flexible procurement is generally better suited to organisations that have the time, expertise, or external support required to actively manage energy purchasing.
Many schools, public sector organisations, and multi-site businesses use procurement frameworks.
These frameworks combine the purchasing power of multiple organisations to negotiate more competitive rates and procurement terms.
Frameworks can also reduce the administrative burden associated with tendering and supplier management.
However, not all frameworks are equal. It is important to understand:
Many organisations are now considering renewable or green energy tariffs as part of their procurement strategy.
These contracts are designed to source electricity from renewable generation such as solar, wind, or hydro power.
For some organisations, this supports wider sustainability objectives and helps demonstrate environmental commitment to stakeholders, customers, parents, or procurement bodies.
However, it is important to understand what different green tariffs actually represent.
Some tariffs involve direct renewable energy purchasing agreements, while others rely on Renewable Energy Guarantees of Origin certificates. Understanding the structure behind the tariff is important when assessing environmental impact and long-term value.
For organisations developing broader sustainability strategies, energy procurement should ideally sit alongside operational analysis, building performance reviews, and long-term carbon reduction planning.
This is particularly relevant for schools currently developing or reviewing their Climate Action Plans, where energy usage and procurement decisions form an important part of the wider sustainability picture.
Another important consideration is whether procurement should be managed internally or supported externally.
Many organisations simply do not have the time or in-house expertise required to monitor markets, negotiate contracts, review billing structures, and identify procurement opportunities.
External support can help organisations:
In many cases, procurement savings are most effective when combined with broader building efficiency improvements.
For example, reducing unnecessary energy consumption through operational changes or improving building performance can significantly improve the value achieved from procurement negotiations.This is one of the reasons why organisations are increasingly combining procurement reviews with services such as Display Energy Certificate assessments, operational analysis, and property audits.
While procurement strategy is important, organisations should avoid viewing procurement in isolation.
Two organisations on identical tariffs can still experience significantly different energy costs depending on:
This is why many organisations are now taking a more holistic approach by reviewing:
For schools and public buildings, this approach can also help improve operational energy performance and support ongoing compliance obligations linked to Display Energy Certificates.
There is no single “best” option when procuring energy. The right approach depends on your organisation’s size, risk appetite, operational priorities, sustainability goals, and internal resources.
For some organisations, a fixed contract may provide the stability they need. For others, flexible procurement or framework agreements may offer greater long-term value.
What is increasingly clear, however, is that energy procurement should no longer be treated as a simple renewal exercise. Rising costs, changing regulations, and growing sustainability expectations mean procurement decisions now play a much larger role in operational performance and financial planning.
By reviewing procurement alongside building efficiency, operational performance, and sustainability strategy, organisations can place themselves in a much stronger position both financially and operationally.
If your organisation is reviewing energy costs, sustainability objectives, or operational efficiency, R2G can help you better understand where opportunities exist and what practical steps can deliver long-term value.
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