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University of Sydney uses Energy Action's online procurement platform

Supplier: Energy Action
03 August, 2012

In December 2010 the University of Sydney became the first university in Australia to utilise Energy Action's online energy procurement platform, the Australian Energy Exchange, to negotiate the renewal of the University's site-wide electricity supply.

The process delivered the University an estimated cost saving of $1.38 million for the period covering July 2011 to December 2012 — a 6.75 per cent saving on current electricity costs.

The University of Sydney was able to achieve this saving by utilising the Australian Energy Exchange to e-negotiate their electricity contract. The online energy procurement platform sees energy retailers bid against one another to supply an organisation's energy — with the process usually resulting in substantial cost savings for customers due to the inherent market dynamics of an online exchange.

While discussions first commenced with Energy Action regarding the University's electricity requirements in July 2010, the University's journey had seen its energy strategy evolve over a period of five years.

During this time, the University of Sydney recognised the need to develop a professional energy procurement strategy which took a holistic approach to procurement and focused on securing the university's energy needs in a timely fashion and at the most competitive market price.

A positive culture developed in the university whereby energy procurement became ‘front of mind' for internal stakeholders and finding innovative solutions to the issue was actively encouraged.

Within this setting, the university identified that its traditional model of procurement (completed through a traditional tender process) may not have been the most competitive model for the University to secure its electricity supply.

The university assessed various innovative approaches to energy procurement before deciding that Energy Action's Australian Energy Exchange represented the best fit solution for the university. Not only could the platform attain the best price for the institution's electricity supply, it was a transparent and cost-effective process used successfully by over 5,000 other organisations across Australia — including some of Australia's most respected brands and businesses.

Once the decision was made to utilise the Australian Energy Exchange, the University and Energy Action worked quickly to assess the university's future electricity requirements so that the institution could be taken to market quickly and during a period of favourable energy market conditions.

Due to the positive culture that had developed in the University around energy procurement this outcome was achieved and the University of Sydney's electricity supply contract was e-negotiated through the Australian Energy Exchange in December 2010 — attracting 16 competitive bids from six electricity retailers. The right governance model, including pre-approved authority, allowed for the acceptance of an attractive offer within 24 hours.

The resulting $1.38 million in savings was as much attributable to the new culture around procurement that had developed in the University, as it was to Energy Action's unique online exchange platform.

In an environment of rocketing power prices, Energy Action believes the University of Sydney's proactive approach to procurement will influence other education institutions around Australia to potentially consider and refine their energy procurement and management policies.

"With a significant reduction in rates achieved, the University of Sydney is currently well positioned to consider better demand and consumption strategies and we see Energy Action as a key partner in that journey," Harry Banga, Director of Procurement Services, University of Sydney, said.

"We will also commence discussion on our supply strategy beyond 2012 to ensure that our rates are continuously managed."

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