How Do Open Energy Auctions Work?

Energy deregulation increased competition among energy suppliers in states that decided to open the flood gates. While this inevitably led to a lot of scams, the market slowly sorted these out. One of the biggest achievements of the deregulated marketplace was the use of energy management systems that augmented the existing workflow of brokers, suppliers, and small business owners.

Renewable Energy Auction Revolution

Many energy management systems feature proprietary software that conduct open energy auctions and reverse auctions between energy brokers and suppliers. While each are different, the basic idea is that brokers can place pricing opportunities in the EMS with a set of given criteria for suppliers to view and bid on.

This application is very similar to open market auctions held across the world for commercial energy investments. These auctions allow renewable suppliers, among others, to reach more customers at a lower cost, while also limiting feed-in-tariffs.

The benefits for consumers using an energy auction is that it enables them to navigate the market to find the best prices and service.

Another application of energy management software is the ability to conduct online reverse auctions. While customers typically bid for goods in an open auction, reverse auctions switch the playing field so that suppliers bid on customer contracts.

Brokers can invite suppliers to bid on pricing opportunities a defined window. Depending on the state, this can include electricity, natural gas, or renewable auctions. This service is usually available for both individual and aggregate contracts.

How Do Open Energy Auctions Work

This application incentivizes suppliers to place the most competitive bids as they have to go up against other suppliers in a limited time frame. This benefits brokers by helping them find the best contract for their customers while reducing the need to cold reach outs and negotiate.

This benefits suppliers as well by giving them the opportunity to reach more customers on the broker’s behalf.

The broker and supplier can improve their working relationship using these software systems, thus providing greater service for the customer.

Energy management software usually comes equipped with invoice data and other account information, such as account load and previous cost factors, so that suppliers and brokers can use this information to create the most appropriate bids.

One thing to keep in mind for small businesses is that the lowest price does not always equal the best offer. There are often hidden contingencies and confusing language that could end up costing customers a lot more than their initial listed rate.

This reinforces the importance of working with an energy consultant to find the best deal for your business and also get the best service.

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Michael Austin

Michael Austin is a Internet Entrepreneur, Blogger, Day Dreamer, Business Guy, Fitness Freak and Digital Marketing Specialist. He also helps companies to grow their online businesses.