Skip to content

Why Ignoring Your Energy Strategy Will Cost You

Published on

In today’s complex energy market, ignoring your energy strategy isn’t just risky—it’s costly. Whether you’re a small business or a large enterprise, energy costs can represent a significant portion of operational expenses. Yet, too many companies overlook their energy strategy, assuming that utility rates are fixed or that they have limited options. The reality is, businesses in deregulated markets can leverage energy strategies that reduce costs, improve sustainability, and future-proof their operations.

Here’s why ignoring your energy strategy could be one of the most expensive mistakes you make—and how to avoid it.


1. Energy Prices Are Volatile—And Timing Is Everything

Energy prices fluctuate daily based on a variety of factors, including supply and demand, geopolitical events, and seasonal changes. In 2022, global energy prices soared by over 50% due to the Russian invasion of Ukraine, causing businesses worldwide to scramble for solutions to contain costs . Those without a strategy in place were left paying significantly more, while companies with proactive energy strategies had the advantage of locking in lower rates before the surge.

By developing a strategic approach to energy purchasing, businesses can avoid these dramatic price swings. In deregulated markets, businesses can choose when and from whom to purchase their energy, allowing them to lock in favorable rates when the market dips. Ignoring this opportunity means leaving yourself at the mercy of market volatility.


2. You’re Missing Out on Competitive Pricing

In deregulated states, businesses can shop around for energy suppliers, each offering different rates and terms. According to the U.S. Energy Information Administration (EIA), businesses that actively manage their energy contracts can save between 10% and 30% annually . Without a strategy, however, you’ll likely be stuck with a legacy broker or even default utility pricing, both of which are often higher than what’s available in the open market.

Case in point: A mid-sized manufacturing company in Texas was paying 15% more than their competitors because they hadn’t updated their energy contract in five years. Once they adopted a strategic approach—comparing suppliers and locking in rates based on market trends—they reduced their energy costs by 20%.

The lesson here is simple: You can’t afford to be passive about energy procurement. A smart energy strategy ensures you’re always getting the best possible price in the market.


3. Energy Efficiency Drives Down Costs Over Time

A comprehensive energy strategy isn’t just about procuring energy at the best rates—it’s also about using energy more efficiently. According to McKinsey & Company, improving energy efficiency can reduce business energy consumption by 20% to 30% . Over time, these savings compound, especially for energy-intensive industries such as manufacturing, healthcare, and commercial real estate.

Companies that ignore energy efficiency measures like upgrading to energy-efficient lighting, optimizing HVAC systems, and implementing energy management systems are leaving substantial savings on the table. Not only does energy efficiency lower costs, but it can also contribute to sustainability goals, making your company more attractive to customers and investors alike.


4. Ignoring Renewable Energy Could Hurt Your Bottom Line

Sustainability for businesses is becoming imperative. As the world transitions to greener energy sources, businesses are under increasing pressure from stakeholders, investors, and even customers to adopt renewable energy strategies. The companies that fail to integrate renewable energy into their strategies risk falling behind their competitors.

Consider the cost of doing nothing: Businesses that ignore renewable energy may miss out on valuable incentives, such as tax credits and renewable energy certificates (RECs). According to the Solar Energy Industries Association (SEIA), federal tax credits can cover up to 26% of solar project costs , and many states offer additional incentives for businesses that transition to renewables. Over time, businesses that adopt renewable energy not only reduce their carbon footprint but also lock in long-term energy savings as the cost of renewable energy continues to decline.

For instance, solar power costs have dropped by more than 80% over the past decade , and businesses that invested early in renewable energy are already reaping the financial benefits. Those who continue to ignore this trend are missing out on significant cost reductions and reputational advantages.


5. Risk Management and Future-Proofing Your Business

An energy strategy isn’t just about saving money today—it’s about future-proofing your business. With regulatory changes, fluctuating market conditions, and potential supply disruptions, companies that fail to actively manage their energy strategy expose themselves to unnecessary risks.

In 2021, the state of Texas experienced a historic winter storm that led to widespread power outages and skyrocketing electricity prices, leaving businesses facing energy bills 10 to 100 times higher than usual . Companies that had built resilience into their energy strategies—such as by securing fixed-rate contracts or implementing backup power systems—were far better equipped to weather the crisis.

Ignoring your energy strategy could expose your business to similar risks in the future. A proactive approach, incorporating risk management tools like hedging, diversified energy sources, and energy storage, can protect your business from unexpected events.


Conclusion: The Cost of Inaction

The cost of ignoring your energy strategy can be significant. From missed opportunities for savings to increased exposure to risk, businesses without a defined energy strategy are likely overpaying for energy and missing out on long-term cost reductions. In deregulated markets, an effective energy strategy gives you control over your energy expenses, allowing you to optimize costs and reduce risk.

Now is the time to take control. By adopting a proactive, data-driven energy strategy, your business can not only reduce costs but also become more resilient, sustainable, and competitive in today’s ever-changing market.

Don’t leave your energy strategy to chance—because the cost of doing nothing is far too high.