Odot
Odot will lower your energy costs using a unique procurement model supported by AI and innovative software. Our knowledge of the energy market will ensure that you benefit from the most advantageous tariffs, continuous price monitoring and a contract to suit your requirements.
Over the past three years, the dynamics of the energy market have undergone profound changes. Energy providers have adapted and have become more cautious. They are adding more stringent clauses in order to limit their own risks, which means that companies now have less bargaining power. To avoid unnecessary costs and fines, i.e. in the event of significant changes such as the implementation of solar panels or charging stations, companies now have to invest more and more time and expertise in their energy policies. These are complex challenges that require a strategic approach.
Challenge 1: Limited volume flexibility and penalties for deviations in estimated energy consumption.
In the past, companies were able to negotiate flexible energy contracts without additional charges for variations in their consumption. Energy suppliers now apply stricter terms and conditions. They impose monthly consumption limits and threaten to impose considerable penalties for deviations. Some suppliers even go so far as to impose fines in the event of company relocations or closures to try to compensate for lost volume. These clauses can add significant additional costs, particularly for companies that operate busy and dynamic sites or are expanding or closing branches.
Challenge 2: Fixed prices on ‘Baseload’ and the complexity of pricing formulas.
Price clicks used to be based on the customer’s consumption profile, but energy suppliers now prefer to apply the baseload principle, which means that customers buy in bulk and must deal with fluctuations in the daily market at current prices every 15 minutes. This increases the risk of additional costs and makes it difficult for companies to accurately predict future energy prices. Pricing formulas are no longer “all-in” and companies need to be aware of details in their contracts such as grid losses, imbalance charges and transport costs, which can significantly affect the total price per MWh. This requires in-depth knowledge of pricing factors, which can be challenging for many companies.
Challenge 3: Additional charges on power and the new capacity tariff.
A new capacity tariff has been in force since the start of 2023 at Flemish level. Companies pay a basic cost for their “reserved power”, which they estimate using a power application to Fluvius. If this capacity is exceeded a penalty will be charged, which is 50% higher than the price per reserved kW. Unused reserved power will not be reimbursed. Moreover, the requested power level cannot be reduced for 12 months, making it difficult for companies to perform a correct analysis and submit an appropriate power application. The purpose of these rules is to encourage companies to be more aware of their power (consumption) and thus create a more balanced power grid. Companies consequently have to carefully consider when to charge electric vehicles or use production machinery, for example, in order to reduce peaks and achieve optimum cost savings.
Challenge 4: Creditworthiness and payment policy.
Once the most advantageous pricing formula has been selected, a credit check often follows. More and more providers are asking for a deposit up front, even in the event of minor liquidity problems. If consumption is high this deposit can soon add up, usually up to the equivalent of 3-6 months energy costs. Refunds are often only paid after 12 months of good payment behavior. Other variants, such as parent guarantees or mandatory direct debit of invoices, are becoming more common. Suppliers are strict when it comes to payment terms and quickly terminate contracts if payments fall behind, forcing companies to find a new supplier.
Conclusion: Odot can help.
The changing energy environment has resulted in a more complex playing field for companies. Understanding hidden costs and terms is critical to avoid financial surprises. This is where Odot comes in. As specialists in energy management, we understand the challenges companies face. We offer not only expert advice, but also solutions to optimize your energy policy and control your costs. Contact us today for a free consultation and find out how we can help you improve your energy management and drive your business forward.