Power in Numbers: An Energy Aggregation Model for Businesses

With energy coming in as a top five expense for many businesses, you may consider joining an energy aggregation. In addition to a cost savings, the right energy aggregation model will be a time savings as well. An energy aggregation is a business model that groups businesses together for the purpose of gaining the advantages of bulk purchase pricing.

The reason this sounds intriguing, is because we harness the power of bulk pricing all the time for our essentials. Think toilet paper. Buying a single roll or two just doesn’t make sense — you’ll pay double the amount than you’d pay for a pack of 20. The same will apply for energy cost. A single small business buying energy will pay more than a grouping of 20 businesses. But imagine taking 500 or even 4,000 businesses to bid for energy.

Albireo Energy, the official operator of many city- and brand-endorsed energy aggregations — including District Buying Power, Boston Buying Power, Philly Buying Power, Dunkin’, and other private multi-location businesses — has a network of suppliers allowing them to group businesses and take them to bid for lower energy costs, and they do just that. Boston Buying Power, run by the experts at Albireo Energy, has successfully grouped thousands of businesses together into this city-endorsed aggregation. As the market fluctuates, businesses are saving around 10% compared to those on the utility rate alone, which depending on the business could be anywhere from a $50 to $5000+ per month savings.

How does it work?

Albireo Energy explains that “Once a company enrolls with an energy aggregation and a large collection of businesses is formed, we take that large database of accounts to our supplier network for an auction where they can bid and compete for the business. Because they’re trying to win so many accounts, the auction drives prices down resulting in documented savings of upward to 40% from what each business would be paying on their own.” It’s a win-win situation, where energy suppliers gain customers and customers receive a great price on their energy.

Learn more about energy aggregations by watching this short video

Why not just stick with the utility?

Not all states in the U.S. offer deregulated energy, but if you’re in a state that does, it’s important to know that you have a choice. Having a choice in where our energy is purchased is the same idea as shopping around for those essentials mentioned earlier. Getting a better deal saves you money, and for businesses, saving money on this large expense could represent the same bottom-line benefit as an increase in sales, according to Carbon Trust. Utility prices are not always the lowest and joining an energy aggregation is an easy way to ensure savings without requiring you to do the dirty work of shopping around.

What if I sell my business?

Like other services, there is a contract for enrolling, however, worked into many supply contracts are transfer agreements where the new owner could take over the existing supply contract. This becomes a great benefit to the buyer, as they too would gain the advantage of better pricing on their energy bills. If the buyer cannot take over the contract, there are other options.

Are all energy aggregations the same?

No. Some areas may have a few operating energy aggregations, but not each one is the same. In some cases, larger cities may select and endorse a specific program to run in their city. This type of program is often chosen after a long proposal process where the city vets and discusses terms on behalf of the businesses in their area. In addition, a good energy aggregation administrator will offer additional services just for being part of their group. For instance, Albireo Energy offers free access to their proprietary utility management software and free energy benchmarking (mandatory energy reporting which is required by many cities) to enrolled businesses.

Are energy aggregations just about the price?

No. Just as it is important for your business to create great vendor relations, it is important for an energy provider to offer excellent customer service and supply management. A good aggregation, like District Buying Power, operated by Albireo Energy and endorsed by the DOEE, has a dedicated customer service team and a dedicated supplier relations team that will keep the service running smoothly.

So, if it’s that good, then why doesn’t every business join one?

Honestly, we don’t know, hence this article. The benefits to business owners are generous, however energy markets are quite volatile and trade in dramatic swings. With energy choice, guaranteed savings do not exist. But with a good energy aggregation, you will know your costs as a business owner, you’ll know that you got the best deal on energy that was available at the time, and your energy accounts will be professionally managed.

For questions about energy aggregations in large cities or for private, multi-location options, reach out to the contacts at Albireo Energy at 855-521-8780 or email energyinfo@albireoenergy.com and ask for the following experts based on your location:

Washington, D.C. (District Buying Power): Matt Wheatley
New England: Bill Riordan
New York and Tri-State: Jon Harnett
Mid-Atlantic, including Pennsylvania: Autumn Shultz
Texas: Laura Bacon