While Energy Link has become a buying platform for large companies with annual multimillion-dollar power bills, the Energy Exchange is targeting smaller businesses, with annual bills in the range of more than $75,000 which are large enough to get non-standard rates from the retailers.
Key to the platform is having eight major retailers vying, through an online auction, to supply electricity contracts, with expected savings of 5%-10%.
Energy Link managing director Greg Sise said the Energy Exchange was the first of its kind in New Zealand.
"We’re condensing down what takes businesses weeks now to just a few hours," Mr Sise said.
In the past, a business might have gone to just three of the eight participating retailers, and come away with up to seven or eight options to consider, which would then take several weeks to work through.
"Often they couldn’t be sure they had really got the best deal," he said.
On the Energy Exchange website, a business puts up its electricity need and a deadline is set for responses.
Usually five and sometimes all eight retailers respond, Mr Sise said.
"Not all will submit. They may not have the capacity [required] right at that point in time," he said.
Sectors using the earlier website prototype before the formal site launch include central government, local government, manufacturers and a large financial institution, he said.
Energy Exchange was not using the spot electricity market, but supplying fixed price variable contracts, which could be for one, three or four years, but on average were for two and a-half years, Mr Sise said.
In order for Energy Link, and the Exchange website, to be independent, no commissions were taken from any energy retailer, but instead fees per business started at $350, he said.
Mr Sise will be hosting a series of events around the country to present the concept to businesses during September and October.
The Energy Exchange was based on two decades of accumulated electricity supply, demand and pricing data and programmed into the mathematical algorithms capable of processing and analysing offers across thousands of sites on a single contract, he said.
"Over the past 20 years our client base has been limited to very large users, those spending millions a year," Mr Sise said.
However, he said businesses spending less than $500,000
could not justify the time, and cost, of engaging an energy consultant or tendering with more than a couple of retailers at a time.
"Our platform removes the barriers to market for businesses spending as little as $75,000 . . . these companies can expect to get savings of 5%-10% on their electricity contracts, relative to doing it themselves," he said.
Procurement manager for Dunedin-headquartered Scott Technology, Jason Schurmann, said better pricing was achieved through harnessing the competition between retailers.
"It’s far too time-consuming to go out to all retailers individually. That the Energy Exchange has all the retailers in one place is attractive," Mr Schurmann said in a statement.
"It takes me at least three to four weeks every year to manage our electricity contracts. It’s a hideously time-consuming process," he said.
Mr Sise said the Energy Exchange is projected to boost Energy Link’s turnover 10%-20% in the year ahead.
It has a nine-person office in Dunedin.Energy Link acts as a consultant to some of the country’s largest electricity consumers and retailers.
For example, it provides procurement and strategy services for Rio Tinto’s Tiwai Aluminium Smelter, which is the country’s largest single consumer, about 13% of total output.
Energy Link also does price modelling and has forecasting tools for major retailers, such as Mercury Energy, Mr Sise said.
