Energy Hedging Strategies
Is Energy Hedging Right for Your Business?
Well-executed hedging strategies can help companies mitigate price risk, budget and forecast more accurately, and enjoy flexibility. A company’s Energy Hedging Strategy should be closely aligned with the company’s financial and strategic objectives. This strategy is an alternative to Fixed Rate Energy Plans which fix 100% of your energy supply price throughout the duration of your contract. Hedging involves fixing a portion of your energy supply while allowing the remainder to “float” in the market. This strategy strikes a balance between price certainty and the opportunity to take advantage of price declines in the future. Generally speaking, there are a few basic procurement product structures to choose from.
Generally speaking, there are a few basic energy procurement structures you can choose from. A hedging energy strategy strikes a balance between price certainty and the opportunity to take advantage of price declines in the future.
Managed-Risk Energy Hedging
For the greatest flexibility to react to market events, you can choose an active, managed hedging approach. With this plan, you can establish price and time-based triggers to execute hedges. Managed hedging allows you to lock in varying blocks of energy at different times over the course of multiple years. This is a forward-looking approach, allowing you to build into a fixed price with a more certain budget.
Best for: Any company or organization can take advantage of managed hedging. This strategy type has many benefits but it does require time and attention, even when working with a qualified energy consultant.
Other energy procurement strategies for consideration are: Fixed Price Energy Plans, and Block and Index Energy Strategies. You may also choose to purchase Renewable Energy Certificates (RECs) to help meet your business’s sustainability goals. Usource energy advisors are ready to answer your questions and help design the ideal energy strategy for your business.