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Energy turnaround for municipal utilities - is full supply now celebrating its comeback?

01 August 2023

2022 was a turbulent year - not least for municipal utilities. Many of the municipal companies experienced the third year of crisis in a row and were once again faced with major challenges. Energy and its procurement was a constant topic. The general uncertainty in the energy supply and rapidly rising prices put the procurement strategies of many municipal utilities to a hard test. The situation on the energy markets has calmed down again for the most part. That certainly lets the crisis teams in the municipal utilities breathe a sigh of relief. However, it is not calm. On the contrary: today's energy markets are and remain volatile environments, even if the prices for electricity and gas have meanwhile eased again. Nevertheless, due to the growth of renewable energies and their dependence on the weather, among other things, the markets are characterised by uncertainties in price development as well as illiquid phases - and will continue to be so increasingly in the future. The procurement of electricity and gas remains a challenge for municipal utilities and other municipal companies. The desire to be supplied with energy at affordable and plannable prices is all the more important.


Energy procurement - an important topic for municipal utilities

Despite the rather gloomy outlook in recent months, 2022 was a good year for many municipal utilities. This is the result of the 2023 municipal utility study by the German Association of Energy and Water Industries (BDEW) and the market research company Ernst & Young (EY). In the survey, 68 percent of the companies stated that they had achieved good or very good business success in the new crisis year and had mastered crisis situations. Nevertheless, 48 percent of the study participants had to report a worse result compared to the previous year 2021. The forecast for 2023: Less than half of the municipal utilities see good or very good prospects for this year. No wonder that many companies prefer to calculate more cautiously at present. The purchase of electricity and gas remains an important item on the agenda. In fact, well over half of the municipal utilities surveyed stated that energy procurement was the most important issue. It is decisive for economic success.

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Full supply for municipal utilities: uncertain times require secure solutions

Consequently, previous procurement strategies have to be questioned and new paths have to be taken. Last but not least, the energy transition is on the doorstep of municipal utilities. Many municipal companies are looking for new solutions for today's supply security - and for a fossil-free future. What offers itself here for municipal utilities? Many small, piecemeal supply contracts or short-term purchasing decisions on the spot market are not. Security of supply and costing looks different. Currently, a procurement solution is emerging that has almost been forgotten: full supply.

Full supply is once again being discussed by municipal utilities. And what is this about? As one of the many possible contract structures in energy trading, it is a supply of electricity, gas or both. Compared to other procurement models, such as Power Purchase Agreements (PPA), with which municipal utilities cover only a part of their energy needs, full supply means a complete coverage of demand via only one supply contract. Although once common for municipal utilities, many of the companies as well as energy suppliers have moved away from full supply. However, the recent energy crisis and ongoing market volatility have shown how secure and useful the tried and tested procurement concept is. So it is not without reason that full supply is now celebrating its comeback.


Advantages of full supply for municipal utilities at a glance

The full supply enables municipal utilities...

  • annual volumes for electricity and gas: The energy demand can be covered by only one individually coordinated contract.
  • to fix energy prices: Contracts for full supply are usually for two years and offer predictability in volatile times thanks to fixed prices. Depending on the individual conditions, longer or shorter supply periods are also possible.
  • risks: The full supplier assumes procurement risks for the customer and thus grants him more security.
  • minimise expenses: The energy supplier takes care of all the tasks involved in energy procurement. Municipal utilities only have to negotiate one contract and can assume a reliable energy supply in the agreed time.

We deliver more: What energy specialists do today

We at ENGIE Deutschland believe that full supply is the right answer to contemporary procurement management for municipal utilities. As one of the first energy experts to re-enter the full-supply business, we are doing pioneering work after the crisis, so to speak. In this crisis, we quoted fair prices even in the most turbulent phases and thus offer municipal utilities great solutions for security of supply before and now - even for longer procurement periods.

By the way: municipal utilities get a specialist at their side through full supply. Energy suppliers like us support municipal companies with a wide range of services and advice on how to achieve a successful energy transition. For municipal utilities, cooperation on an equal footing is always a win-win situation and paves the way to a fossil-free future. This is a long-distance run that many municipal utilities still have to make: In the current municipal utility study, only one third of the municipal utilities stated that they had a decarbonisation strategy. 51 percent of the municipal utilities were still in a transitional phase in the required strategy process. Whether green energy solutions or CO2 offsets - let us advise you. We support you!

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Our Expert

Jörg Nauerth
Jörg Nauerth works as a Senior Originator for ENGIE Energy Management Solutions GmbH. As an expert with decades of experience in the energy industry, he is the contact person for municipal utilities on all aspects of procurement, PPAs and certificates.

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