Odot
Odot reduces your energy costs through a unique procurement model, supported by AI and innovative software. Our knowledge of the energy market, ensures you get the most advantageous tariffs, continuous price monitoring and a contract that suits you.
In the world of energy purchases for businesses, there is a subtle but crucial distinction between two terms: profile clicks and block clicks. Price fixes or price clicks are done to hedge the risk of price increases. However, in a falling price market, performing clicks in block can lead to very high additional costs for companies buying energy in the business market. We find that based on their contract, many companies do not realise whether they are clicking in block or profile.
1. Profile clicks versus block clicks.
With profile clicks, a company, based on its consumption profile, fixes the price of (part of) its consumption. If a company fixes 70% of its consumption with a profile click, half of its consumption for each hour is charged at this fixed price and the other half is charged at the variable price formula. The red part is the 70% of the volume bought at the fixed price. So there is no hourly billing.
With a block click, one fixes the price for an equal volume every hour for the period one fixes. Thus, the block click does not follow the profile of the company. This often results in companies having bought too much volume in off-peak hours and too little in peak hours. With a falling market price, this means that the overbought volume is sold at much lower prices resulting in a loss.
2. Realistic case: Click end 2023 for delivery 2024 in a falling price market.
Companies that executed a block click last year for delivery 2024 may have clicked at higher prices than the current market price. In block-click contracts, each hour is settled. For example, one food company wanted to click 95% of its volume at the end of 2023 for delivery 2024 at €128/MWh. If this click had happened in a block-click contract there would have been an additional cost of €90,000 on a volume of 690 MWh just on the January invoice. Which would have led to an average price of more than €270/MWh or more than double the clicked price and almost quadruple the variable price.
So, what should companies do?
Through profile analysis, negotiate a suitable energy contract with an associated thoughtful purchasing strategy. Odot negotiates and optimises energy contracts with expertise in the field.