Optimising Energy Procurement for Small and Medium-Sized Enterprises

Abstract

Increasing energy prices present a challenging task for small and medium-sized enterprises (SMEs). Since the availability of energy plays a crucial role in running the day-to-day business, this paper focuses on energy procurement of SMEs. Due to limited financial and human resources, SMEs find it difficult to implement measures to reduce energy costs. It is shown that a sustainable reduction of energy purchase prices can be achieved by choosing an appropriate procurement strategy. We develop a quantitative optimisation model that takes into account specific needs of SMEs. The aim of the model is to minimise energy purchase costs while assuring that demand is fulfilled at all times. Uncertainty regarding future energy prices and consumption is modelled by considering different scenarios for the evolution of uncertain parameters. A minimax regret approach is used to determine a robust selection of purchase contracts. For strategic decision support, a robust optimisation model is particularly well-suited to choose a risk-averse procurement strategy. In an exemplary case study, different procurement strategies are compared. Computational results show that a structured energy procurement concept has a high potential to significantly reduce energy costs if SMEs are willing to take over volume and price risk.