Reverse auctions lowering energy prices for businesses
Leading Australian energy management consultancy firm, Energy Action claims it has witnessed a significant decline in the price of the retail energy component of electricity contracts after conducting a reverse super auction to procure electricity for 11 large businesses.
A reverse auction is an auction conducted through an online platform where energy retailers bid for the electricity contracts of businesses and compete on price to secure the contract. Energy Action owns the leading platform for these auctions, the Australian Energy Exchange, which procures approximately $1.3 billion worth of electricity contracts on behalf of Australian businesses per annum, which is approximately eight percent of the total commercial and industrial market spend.
This super auction was one of the largest undertaken by Energy Action through the Australian Energy Exchange – evidence of the fact that an increasing number of Australian businesses are looking at more efficient ways to procure their energy needs and reduce their cost bases.
Eleven of Energy Action’s large customers across a range of industries secured contracts by participating in back to back reverse auctions over a 48-hour time-frame, creating a super auction. The retail energy component price was down 21 percent on average from existing contract prices with some rates falling to seven-year lows in New South Wales and Victoria. This represents a saving on average of greater than five percent off the customer’s total electricity contracts.
Energy Action chief executive officer, Scott Wooldridge says, “The continuing softening of the market, combined with competitive pricing in the super auction and retailers prepared to lock in long-term contracts to the end of 2017, achieved excellent results for our customers at historically low prices.
“It is clear that a competitive online bidding process is delivering cost savings for Australian businesses and, through increased uptake of our reverse auction platform, we are helping our customers get access to the complete spectrum of energy retailers in the market.”
Energy Action general manager operations, Helge Sangkuhl adds, “The results achieved for our customers demonstrate the effectiveness of our unique reverse auction platform, the Australian Energy Exchange. We intend to conduct another super auction in the second week of June given the recent success and customer interest.”