Procurement Strategy
The Right Procurement Strategy Determines Costs, Risk and Budget Certainty.
Choosing the right procurement strategy is one of the most important decisions in professional energy purchasing. It influences not only energy prices but also budget certainty, risk exposure, ESG objectives and the long-term financial performance of real estate portfolios.
NeoBid develops tailored procurement strategies for property owners, asset managers, property managers and institutional investors based on portfolio size, consumption profile and market conditions.
What Is an Energy Procurement Strategy?
An energy procurement strategy defines how, when and to what extent electricity and natural gas are purchased.
It involves much more than selecting an energy supplier. Key considerations include:
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Choosing the optimal purchasing date
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Selecting the appropriate procurement model
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Determining contract duration
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Managing price risks
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Supporting sustainability objectives
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Integrating energy procurement into long-term asset and ESG strategies
Professional energy procurement therefore begins with a clearly defined strategy—not with a tender.
Why Is the Procurement Strategy So Important?
Many organizations focus almost exclusively on the quoted energy price.
In reality, significant differences in long-term costs often result from choosing the right procurement strategy.
It directly influences:
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Energy costs
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Budget certainty
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Price risk
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Contract flexibility
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ESG performance
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Carbon reduction
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Procurement effort
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Portfolio performance
For larger real estate portfolios in particular, the procurement strategy can have a substantial financial impact.
Which Procurement Models Are Available?
Different portfolios require different procurement approaches.
Fixed-Price Model
The entire energy demand is purchased at a single point in time for a fixed price.
Advantages
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High budget certainty
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Simple financial planning
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Minimal administrative effort
Suitable for
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Smaller portfolios
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Risk-averse owners
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Stable budgeting requirements
Tranche Procurement
Energy demand is purchased in several tranches over a defined period.
This spreads price risk across multiple purchasing dates and reduces exposure to short-term market volatility. It combines greater flexibility with improved risk diversification and is commonly used for larger energy volumes.
Suitable for
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Large real estate portfolios
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Institutional investors
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Long-term procurement strategies
Spot Market Procurement
Energy is purchased based on current wholesale market prices.
This model offers opportunities during falling markets but involves significantly higher price volatility and requires a greater willingness to accept market risk.
Hybrid Procurement
Different procurement models are combined.
For example, base-load demand may be secured through long-term contracts while variable consumption is purchased flexibly on the market.
Which Strategy Fits My Portfolio?
The optimal procurement strategy depends on several factors, including:
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Portfolio size
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Number of delivery points
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Electricity and gas consumption
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Load profile
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Budget planning
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Risk appetite
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Existing contract terms
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ESG objectives
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Decarbonisation strategy
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Investment planning
For this reason, NeoBid develops tailored procurement strategies rather than standardized purchasing solutions.
Procurement Strategy Is Part of Asset Management
Professional energy procurement today influences far more than operating costs.
The procurement strategy has a direct impact on:
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Net Operating Income (NOI)
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Cash flow
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Budget planning
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ESG performance
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Decarbonisation
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Investor reporting
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Asset value
Energy procurement has therefore become an integral part of strategic portfolio management.
When Should the Procurement Strategy Be Developed?
Ideally, planning should begin 12 to 24 months before existing energy contracts expire.
This provides sufficient time to:
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Monitor market developments
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Prepare competitive tenders
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Evaluate different procurement models
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Select the optimal purchasing window
Organizations that wait until shortly before contract expiry often lose strategic flexibility and are forced to purchase at prevailing market prices.
The most important decision in energy procurement is not choosing the supplier—it is choosing the right procurement strategy. It determines costs, risks and budget certainty for years to come.
Thomas Ruebelmann
Co-Founder & Managing Director, NeoBid GmbH
Frequently Asked Questions
Is there one best procurement strategy?
No. The optimal strategy depends on your portfolio, consumption profile, budget planning and risk tolerance.
Is tranche procurement always the most cost-effective option?
Not necessarily. Tranche procurement reduces price risk but does not automatically guarantee the lowest energy price. The outcome depends on market conditions and purchasing timing.
When is a fixed-price model the right choice?
Fixed-price contracts are particularly suitable when budget certainty is the highest priority or when procurement volumes are relatively limited.
Does NeoBid help develop the procurement strategy?
Yes. We analyse your portfolio, develop the most appropriate procurement strategy together with you, and support the entire tendering, supplier selection and contract management process.
