Multi-year savings for a multinational networking and telecommunications company
The Challenge
This company provides information and communications technology solutions for networks, IT and cloud, and media markets worldwide. Their US operations needed help managing their energy procurement because rising costs were eating into their bottom line. In 2011, they decided to do something about it.
That is when Mantis Innovation entered the picture. The company needed to reduce its energy costs and purchase more strategically. Due to the specific requirements, they had with contract terms, this left a small pool of potential suppliers.
The Solution
Over the last 3 contract cycles, Mantis has helped them lower their rates incrementally by 11% and 25% compared to the previous contract. Additionally, they chose the 100% green option in this last round in 2019, which was a 60-month contract.
Over the past 12 years, Mantis helped them negotiate low market rates, navigate a complicated market, and educate them along the way.
Most recently, they were looking at an 83% increase in their fixed rate compared to their previous contract rate; while they understood that the market had changed dramatically in the past 2 years, it was still hard to stomach. We suggested they look at a hybrid solution, which would spread the purchasing over the course of their three-year contract and allow them to take advantage of various price drops. This also allowed them to lock in all components of the fixed adder, such as renewable portfolio standards, capacity, ancillaries, etc., which have all increased since then. This strategy has already led to just shy of 2.5 million dollars in savings vs. the utility in the first six months of the contract.
Additionally, Mantis has helped this company with billing issues, market monitoring, and solar feasibility and has truly been an energy partner for over 13 years.
What is a reverse auction?
A reverse auction is a procurement method in which the traditional roles of buyer and seller are reversed, meaning there is only one buyer with many potential vendors.
These types of auctions have been employed by both government entities and the private sector for decades, offering a proven method to enhance the procurement of goods and services. Specifically, energy reverse auctions offer a transparent and competitive marketplace through which businesses and secure new energy contracts. Suppliers offer an identical product but can compete on their willingness to supply it at varying costs.