What if small businesses were able to approach energy suppliers with the weight and pedigree of a much larger organisation? Energy baskets can have this effect.
In the same way much larger organisations can buy stock in vast quantities, undercutting the little guys with their superior purchasing power, industry giants can secure much more favourable business energy rates than the little guys.
Energy basket deals, sometimes called energy buying groups, are a way for small-to-medium businesses to earn a seat at the top table and work out a competitive energy deal that would have been otherwise off limits.
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An energy basket is a business energy procurement arrangement where multiple businesses and organisations pool together to get a better deal.
When multiple small-to-medium businesses bundle their total energy usage together, they can access lower rates and better deals with business energy suppliers.
Despite bundling together in a basket, each business maintains its own meter, contract and billing, so you can maintain a level of control.
Think of it this way: a large supermarket has greater purchasing power than a small shop due to buying produce in huge quantities from suppliers.
For example, Supermarket A buys 5,000 cartons of eggs. They can negotiate a lower unit price per carton due to the size of their order.
Elsewhere, Local Shop A buys 50 cartons of eggs. They cannot access the same unit price per carton due to their reduced purchasing power.
Now imagine Local Shop A teams up with Local Shop B, C and so on. Collectively, they order 5,000 cartons of eggs and can therefore access the reduced unit price.
That’s how an energy basket works. A collective of smaller businesses pooling together to build the purchasing power of a larger business.
Energy basket deals may not suit every business, but there are certain types that could benefit:
Small-to-medium businesses: Small businesses lack the volume required to negotiate as effectively as larger businesses.
Low energy users: For the same reasons as above, low energy users simply don’t use enough energy to buy in great volume.
Charities and non-profit organisations: Small non-for-profit organisations, charities and places of worship operating on tight budgets may benefit from cost reduction as a collective.
Multi-site operators and chains: Businesses with multiple sites can group their individual meters under one banner to simplify their energy deals in one basket.
There are two main types of energy basket deal:
Flexible purchasing: Energy is bought in chunks at intervals throughout the year. You can lock in prices for short bursts, harnessing the power of the collective to likely negotiate better rates than you would alone.
Who is this for? Businesses with a moderate appetite for risk, who can ride out price spikes as well as benefit from lower rates.
Fixed purchasing: The group negotiates a longer-term fixed rate across a set time period, ranging from one year to a few years. This offers more stability and predictability than a flexible contract.
Who is this for? Businesses with tight budgets and lower appetite for risk, who want to set and forget about their energy deal.
We want to give you the full picture before entering a basket deal so you can make an informed decision. There are two main considerations to make before you secure a deal:
Larger energy users may already have enough purchasing power to secure competitive rates independently.
Various industry trade bodies and associations boast their own energy baskets that members can join if they wish.
Businesses tend to stick to others in the same sector. Retailers may bundle together, charities may form a collective, manufacturers could join forces.
Troo is available to discuss energy baskets to help you find the right energy deal. Equally, we’ll discuss other options to make sure you secure a deal that suits your specific business needs.
Most energy baskets are managed by a procurement specialist, broker, trade association or energy consultant on behalf of the group.
They monitor market conditions, negotiate with suppliers and manage purchasing decisions according to the basket's agreed strategy.
Business energy is confusing. You know you need to stay on top of such a major cost, but that can be difficult while focusing on running your business and serving your customers.
We get it. We can support you.
Troo exists to help businesses like yours make sense of their energy needs, simplify complex information and make smart decisions that lead to real change and reduced costs.
We are not here to sell you a quick fix. We're here to understand what matters to you, offer clear advice, and take ownership of the hard parts, so energy becomes one less thing to worry about.
Book a free energy health check today for practical guidance on your business electricity, gas or water bills.