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Energy Volatility Is the New Normal…

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Why Australian Businesses Need a Strategic Approach to Electricity Procurement

For many years, energy procurement for Australian businesses followed a familiar pattern.

A contract would expire, a few quotes would be requested, and the lowest price would usually win.

That approach worked when electricity markets were relatively stable. Today, that stability has largely disappeared.

Global geopolitical tensions, accelerating coal plant retirements, rising gas prices and the rapid transition toward renewable generation are reshaping the Australian energy market. Together, these forces are creating an environment where business electricity prices can shift quickly and unpredictably.

For businesses that rely on electricity as a core input cost, this volatility presents a new challenge: energy risk management.

The Global Forces Reshaping Energy Prices

Energy markets today are deeply interconnected.

Events occurring thousands of kilometres away can influence local business electricity prices in Australia within weeks or even days.

Recent geopolitical tensions in the Middle East have already demonstrated how quickly oil and gas prices can move when global supply chains are threatened. Roughly 20% of the world’s oil passes through the Strait of Hormuz, making it one of the most critical energy chokepoints globally. (*Source: International Energy Agency – Global Oil Supply Routes)

Even when Australia is not directly reliant on these supplies, global commodity pricing still affects domestic fuel, gas and electricity markets.

Energy markets respond not only to physical shortages, but also to perceived risk and supply uncertainty.

Structural Change in the Australian Energy Market

While global tensions play a role, the most significant changes affecting business electricity prices in Australia are happening closer to home.

Several major coal-fired power stations are scheduled to retire over the coming decade, removing large volumes of reliable baseload generation from the grid.

According to the Australian Energy Market Operator (AEMO), more than 60% of Australia’s coal fleet is expected to close by 2038, fundamentally altering the generation mix. (Source: AEMO Integrated System Plan)

As older plants retire, the electricity system is becoming increasingly reliant on a combination of renewable generation, gas peaking plants and energy storage.

While this transition is essential for decarbonisation, it also introduces new forms of price volatility as the grid adjusts.

Periods of low renewable output or high demand can push wholesale business electricity prices significantly higher.

Why Energy Procurement Timing Matters More Than Ever

Electricity contracts are typically priced using forward wholesale energy markets.

Retailers hedge their positions months or even years in advance, which means the price offered to businesses today reflects market expectations of future supply and demand.

If wholesale markets rise sharply — due to fuel costs, supply constraints or geopolitical events — those increases can quickly flow through to contract pricing.

This is why many businesses that wait until the last minute to renew energy contracts often find themselves exposed to higher prices.

Strategic energy procurement, by contrast, involves monitoring markets over time and identifying opportunities to secure favourable pricing before volatility increases.

Buying Energy vs Managing Energy

One of the biggest shifts occurring in the commercial energy sector is the difference between simply buying energy and actively managing it.

Traditionally, energy procurement was treated as a transactional exercise.

Today, it increasingly resembles financial risk management.

Businesses with sophisticated energy strategies are focusing on:

monitoring wholesale electricity markets
staggering contract purchases over time
analysing load profiles and demand patterns
evaluating forward market trends
improving energy efficiency and demand management

This approach allows companies to reduce exposure to sudden price spikes and maintain greater budget certainty.

Demand Strategy, Network Charges & the Hidden Cost Most Businesses Miss

One of the most overlooked areas in business energy costs is not the energy itself — but how that energy is used.

For larger energy users, particularly in the commercial and industrial space, network charges and demand profiles can make up a significant portion of the total bill.

These costs are not fixed. They are influenced by behaviour.

Nick Halaris, Managing Director at Electricity Brokers, explains that this is where many businesses unknowingly leave money on the table:

“Most businesses focus on the energy rate, but the real opportunity often sits in how they use energy. If your demand profile isn’t optimised, or your power factor is off, you can be paying unnecessary network penalties without even realising it.”

Electricity networks are designed to handle peaks. When businesses draw large amounts of power at once, or operate inefficiently, they place additional stress on infrastructure.

That stress comes at a cost.

In some states, such as in the South Australian Power Network, businesses can incur additional charges if their power factor drops below acceptable thresholds (often around 0.85), effectively penalising inefficient energy use.

This is where strategic energy management goes beyond procurement.

It becomes operational.

Turning Energy Usage Into a Financial Advantage

Rather than simply reducing consumption, leading businesses are now actively managing when and how they use energy.

This includes:

participating in demand response programs
adjusting load during peak pricing periods
leveraging retailer and network incentives
optimising equipment performance and power factor

In some cases, businesses can even sell energy back to the grid during high-demand periods, creating a new revenue stream while supporting grid stability.

Nick notes that this shift is already underway among sophisticated energy users:

“We’re working with large energy users who are no longer just buying electricity — they’re actively managing it. Through demand response and smarter load management, they’re reducing network charges and, in some cases, getting paid to support the grid at peak times.”

Why Data Matters More Than Ever

To unlock these benefits, businesses need visibility.

That means understanding:

interval data (how energy is used throughout the day)
peak demand patterns
power factor performance
network tariff structures

Without this level of insight, businesses are effectively operating blind — and often overpaying as a result.

This is particularly relevant for C&I customers with unbundled billing structures, where network and demand charges are clearly itemised and directly impacted by usage behaviour.

More Than Just the Energy Rate

Energy savings are no longer just about negotiating a better rate.

They are about:

how you buy energy
when you use energy
how efficiently your systems operate

Because in today’s market, two businesses on the same tariff can have vastly different energy costs — simply based on how well they manage their demand and infrastructure.

Why Contract Structures Matter

Another critical factor is understanding how electricity bills are structured.

Small and medium-sized businesses typically receive bundled electricity pricing, where network charges and environmental costs are incorporated into the overall energy rate.

Larger commercial and industrial customers, however, often receive unbundled pricing, where these charges appear as separate line items.

This means their electricity costs can be more directly influenced by wholesale market movements and network demand charges. (Source: Power Maintenance – Why a Commercial Electricity Broker Must Be More Than a Price Comparator)

Understanding these differences is essential when developing a procurement strategy.

Strategic Energy Planning Is Becoming a Competitive Advantage

Energy costs can represent a significant operational expense for many businesses.

Manufacturing, logistics, cold storage, hospitality and data centres are particularly exposed.

In this environment, companies that actively manage energy procurement can gain a measurable advantage.

They are better positioned to:

stabilise operating costs
reduce exposure to market spikes
plan long-term capital investments
remain competitive in volatile economic conditions

Those that treat energy purely as a utility expense often discover the cost implications too late.

Expert Insight from the Market

Nick Halaris, Managing Director at Electricity Brokers, believes the shift toward strategic energy management is only beginning.

“Energy markets today behave more like financial markets than traditional utilities. Prices move based on risk, expectations and global events. Businesses that treat electricity procurement strategically will consistently outperform those that simply renew contracts when they expire.”

He also notes that volatility is unlikely to disappear anytime soon.

“We’re entering an era where global geopolitics, the energy transition and domestic supply changes all influence business electricity prices. The businesses that succeed will be the ones that understand energy as a strategic input, not just a monthly bill.”

Energy Markets are Evolving Rapidly

Geopolitical tensions, the transition toward renewables and the retirement of ageing power stations are combining to create a more dynamic and unpredictable pricing environment.

For Australian businesses, this means one thing: Energy procurement can no longer be treated as an afterthought. It requires planning, insight and a clear strategy.

Because in a volatile energy market, the biggest risk is not price increases — it is being unprepared when they arrive.