The hidden cost of passive electricity procurement

For many Swedish companies, electricity procurement has long been built on continuity. A familiar supplier, a recurring tender process and a contract model that has worked in the past have often been seen as sensible and low-risk choices.

In a stable market, this approach was understandable. Electricity prices were more predictable, supplier relationships were established and procurement could often be managed as a routine purchasing process. But as Sweden’s electricity market has become more volatile, interconnected and difficult to forecast, passivity has become a risk in itself.

The hidden cost of passive electricity procurement is not always visible in the delivery fee. It can appear in poor forecasting, unmanaged imbalance exposure, unclear cost structures, weak hedging decisions or missed opportunities to respond when market conditions change.

“The market has changed quickly, but many procurement models have not changed with it. In a more volatile electricity market, doing nothing is rarely cost-neutral,” says Janne Heikka, Power Solutions Lead at Gasum.

A familiar supplier is not automatically the safest option

Many companies still buy electricity much as before: they ask several suppliers for prices, compare the final number and choose the cheapest-looking option. The problem is that the headline price rarely tells the full story.

Electricity procurement can include hedging, market access, balancing, forecasting, imbalance management, reporting and operational support. If these services are bundled together without transparency, buyers may not understand what they are paying for, where risks remain or where value is being created. A company may receive an attractive price for one part of the service while paying more elsewhere, or lack the data needed to see whether its own behaviour is increasing costs.

“A long supplier relationship can be valuable, but it should not replace transparency. Buyers need to understand what services are included, how the costs are formed and which risks remain with them,” Heikka says.

Passivity can become a competitiveness issue

For many industrial companies, electricity is a major cost item. If procurement is managed passively, energy costs can directly affect competitiveness, especially in sectors with tight margins and high electricity consumption. The risk is that companies remain in old procurement models because they feel familiar, even though the market has changed.

As volatility continues and electricity demand grows through new industrial investments, data centers and electrification, pressure on the power system is unlikely to disappear. For electricity buyers, the safest option is no longer necessarily the most familiar one, but the one that provides transparency, expertise and an active approach to managing risk.

“For energy-intensive companies, electricity procurement is no longer only an administrative purchase. It is a strategic cost and risk management question that can have a direct impact on competitiveness,” says Heikka.

Three things electricity buyers should demand

The key question is not simply whether companies should switch supplier, but whether their current procurement model still fits the market. Buyers should demand three things from their electricity market partner.

1. First, companies need transparency into data and costs. They should have access to information on consumption, production, forecasts and imbalance costs, and they should understand what each service component costs, what value it provides and which risks remain with the customer.
2. Second, buyers need a clear understanding of what they are buying. Electricity procurement is no longer only about buying kilowatt hours at the lowest apparent price. Hedging, price risk management, forecasting, operational flexibility and imbalance exposure can all affect total cost.
3. Third, the procurement model must fit the current market. Structures designed for a more stable market may no longer deliver the best outcome. Companies should ask whether their model gives them enough flexibility, transparency and control, and whether the relationship is based on performance and value creation rather than contractual lock-in.

“Good electricity procurement starts with visibility. When companies understand their consumption data, forecasting accuracy, imbalance costs and service fees, they can make better decisions on on both cost and risk,” says Heikka.