Case Study:
Teesside University is a vibrant campus in northeast
England with a history of environmentally-friendly
practices, as evidenced by its Eco Campus Gold
award. The University has launched its £300m
Campus Masterplan to grow and redevelop the campus over the next decade, including spending on energy and carbon reduction infrastructure.
CUSTOMER:
INDUSTRY:
LOCATION:
Teesside University
Education
United Kingdom
Electricity & Natural Gas Price Risk Management
Customer Overview
The rapid growth plans magnified the University’s already complex energy requirements, and they looked for an experienced partner to help procure 26 GWh of energy and to define a price risk strategy that would gain support of the main decision makers across the organization.
Challenge
To locate the best competitive supply sources, World Kinect organized an energy procurement tender for Teesside's 144 supply points. Next, we conducted a price risk management workshop to determine the University’s accepted risk levels and implemented the price hedging strategy identified at the workshop.
World Kinect Solution
In partnership with Teesside, World Kinect managed the University’s Official Journal of the European Union (OJEU) tenders, a complex and time-consuming exercise required for public-sector energy bids. We ensured the University got the best possible energy supplier that would balance value and risk and meet their specific requirements.
After securing reliable supply, the next step was to structure the price risk management program. A critical part of this transition involved determining what are the price risk objectives of the University. World Kinect held a risk management workshop with key university stakeholders to discuss strategic options and benefits, defined an acceptable level of risk, and confirmed all decision makers were aligned.
Finally, World Kinect implemented a Flexible hedging strategy with Advanced Optimization to support Teesside with the move from long-term fixed positions to a more flexible procurement strategy to allow Teesside to take advantage of market opportunities when energy prices tend to decline.
The Advanced Optimization active portfolio managing technique implemented by World Kinect achieved a portfolio price better than two of the reference prices agreed at the start of the contract. The University benefited greatly from this approach and saved over £100k in just one fiscal year.
Because World Kinect actively managed every step of the way both the price risk management and the detailed OJEU tender process, the University saved valuable time and resources.
Business Impact
SAVED TIME AND UNIVERSITY RESOURCES
£100K REDUCED
IN ENERGY
COSTS IN 1 YEAR
For six years, World Kinect have provided us with the forward-thinking energy management services we’ve needed. They are flexible, quick to provide solutions, and share our vision for the campus. World Kinect have kept pace with our growth ambitions and reduced our energy costs at the same time, which really helps our wider remit of delivering great value to our students.”
ANDREW MACLAREN, ASSISTANT DR,
ESTATES SERVICES & ENERGY PROCUREMENT,
TEESIDE UNIVERSITY, UK
Source energy
and fuel
PRICE RISK STRATEGY STAKEHOLDER
ALIGNMENT
Minimize price
and operational
risk