Energy Procurement Is No Longer Just a Cost Decision

For many real asset owners and occupiers, energy procurement has historically been treated as an operational task: renew the contract, manage the budget, and report the consumption.

That approach is no longer enough.

Energy must now be considered strategic issue that cuts across financial performance, resilience, decarbonisation and investor confidence. In a market impacted by price volatility, grid constraints, supply uncertainty and tightening sustainability expectations, the way organisations buy and manage energy now has a direct impact on asset value.

The question is no longer simply: how do we secure the cheapest tariff?

It is: how do we build an energy strategy that protects cost certainty, strengthens resilience and supports credible decarbonisation?

Price volatility is changing the procurement conversation

European energy markets remain volatile. While prices have eased from the peaks seen during the last energy crisis, the underlying drivers of uncertainty have not disappeared.

Geopolitical disruption, shifting gas supply dynamics, changing demand patterns, renewable generation variability and infrastructure constraints continue to create a challenging environment for long-term planning.

For real estate owners, this creates practical and financial pressure. Energy cost uncertainty can affect service charge management, asset-level underwriting, operational budgets and investor reporting. Fixing costs entirely may feel like the safest route, but doing so at the wrong point in the market cycle can also lock organisations into poor value.

This is where procurement needs to become more strategic.

Many portfolios still approach energy buying reactively, often renewing contracts close to expiry or relying heavily on supplier-led terms. In multi-asset and multi-country portfolios, decision-making can become fragmented across asset managers, property managers and local teams, with limited coordination at group level.

That fragmentation creates avoidable risk.

A more resilient approach requires a defined procurement framework, shaped around market intelligence, portfolio exposure, risk appetite and sustainability objectives. Energy procurement should not sit separately from investment strategy. It should be part of it.

Supply resilience is becoming an underwriting issue

Cost is only one part of the challenge. Supply resilience is becoming just as important.

The energy transition is changing the structure of energy systems. More renewable generation is essential for decarbonisation, but it also brings new operational complexities, including grid balancing challenges, curtailment, transmission constraints and greater exposure to intraday price volatility.

At the same time, physical climate risk is placing additional pressure on energy infrastructure. Extreme heat, storms, drought and grid stress can all affect generation, transmission and demand.

For real asset owners, this means assumptions around energy availability, reliability and cost need to be revisited. Assets that lack a credible energy resilience plan may become harder to underwrite, refinance or lease, particularly as occupiers and investors place greater emphasis on operational continuity and climate preparedness.

Energy resilience is therefore not just an engineering concern. It is a commercial concern.

The end of “paper renewables”

For years, many organisations have relied on renewable energy certificates to support market-based Scope 2 reporting. These instruments played an important role in getting organisations started onrenewable electricity claims.

However, the market is moving. Fully decarbonising the UK electricity system by 2035 is central to delivering national Net Zero. In the UK buildings account for over 60% of UK electricity demands. The way power is bought directly accelerates that transition.

Investors, regulators and sustainability frameworks are increasingly asking more detailed questions about whether renewable electricity procurement is genuinely contributing to decarbonisation. The focus is shifting from simply holding certificates to understanding the quality of the procurement strategy behind them.

The UKGBC’s guidance on renewable enery sets out the principles for judging the quality:

1. Renewable – is the electricity verifably from renewable generation and is it sourced within the same market as the consumption it is claimed against?
2. Additionality – did the procurement drive a material increase in renewable capacity? This is a demanding test as generation that already exists or is underwritten by any governmentl subsidy does not create the causal link between the organisation’s spend and any emissions avoided.
3. Time-matched – was the electricity supply matched to when it was used rather than netted off across the year?

The strongest strategies maximises all three and this is where the instruments separate. Unbundled REGOs are low cost and scalable but are difficult to prove additionality, time matching and imported European Gos weaken the case for the market boundaries.

On-site generation perform strongly against the criteria provided that the capacity is new. For instance an on-site PPA over an existing subsidised assets which carry no additionality.

Off-site PPAs and virtual PPAs can support new capacity and provide longer-term hedging, but they require careful commercial, regulatory and risk management.

There is no single answer that works across every portfolio.

The right strategy depends on the organisation’s consumption profile, geography, risk appetite, sustainability commitments and operational constraints.

Why procurement and sustainability need to be considered together

Energy procurement and sustainability strategy have often been managed by different teams, with different objectives and different data sources.

That separation is becoming a problem.

Procurement teams may be focused on price, contract structure and supply security. Sustainability teams may be focused on carbon accounting, renewable claims, disclosure frameworks and net zero targets. But the decisions are deeply connected.

A procurement contract that looks attractive financially may not support credible carbon reporting. A renewable claim that looks strong on paper may not stand up to emerging expectations around additionality, location and time matching. A sustainability target may not be achievable without a realistic energy buying strategy behind it.

This is why real asset owners need a more integrated approach, one that connects procurement, data, risk, carbon reporting and regulatory readiness.

A more strategic route forward

The EVORA x Arcadia partnership has been built to support clients across this increasingly complex landscape.

By combining EVORA’s real asset sustainability, carbon and regulatory advisory expertise with Arcadia’s energy procurement, market intelligence and platform capabilities, clients can take a more joined-up approach to energy decision-making.

This includes independent and transparent procurement advice, risk-managed buying strategies, supplier bid analysis, validated energy data, invoice auditing, emissions calculations, renewable energy roadmaps and support across various reporting frameworks.

The aim is to help organisations move from fragmented, reactive procurement to a more strategic model, one that is commercially robust, data-led and aligned with long-term sustainability objectives.

The strategic opportunity

The energy and sustainability landscape facing real asset owners is more complex than it has been in years. But complexity also creates an opportunity.

Organisations that act now can improve cost certainty, strengthen supply resilience, enhance reporting credibility and position their portfolios ahead of changing market expectations.

Those that wait may find themselves exposed to higher costs, weaker data, less credible renewable claims and increased scrutiny from investors, lenders and occupiers.

Energy procurement is no longer just about buying power.

It is about protecting value, managing risk and building credible pathways to decarbonisation.

For real asset owners, that makes it a board-level issue — and one that needs to be addressed with the right data, the right strategy and the right independent advice.

Ready to rethink your energy procurement strategy?

As energy markets become more volatile and sustainability expectations continue to evolve, now is the time to assess whether your procurement approach is supporting both commercial resilience and credible decarbonisation.

EVORA and Arcadia can help you move from fragmented energy buying to a more strategic, data-led approach — connecting procurement, risk management, carbon reporting and long-term value protection.

Get in touch with our team to explore how we can support your portfolio.