# Energy procurement Source: https://ordergroup.co/glossary/energy-procurement/ Last updated: 2026-10-10 > What energy procurement means for large buyers: fixed price, tranche and spot models, supplier tenders, invoice control and what the software tracks. [Energy](https://ordergroup.co/glossary/energy/) 4 min read # Energy procurement Also known as: energy purchasing, electricity procurement, tranche purchasing Definition Energy procurement is how a business buys the electricity and gas it consumes: choosing a contract model, fixing prices through tranches or supplier tenders, and checking the resulting cost, risk and invoices against a budget. Cite this entry Text "Energy procurement". Order Group, Software glossary, 10 October 2026. https://ordergroup.co/glossary/energy-procurement/ HTML `Energy procurement - Order Group` Reviewed by [Paweł Zieliński](https://ordergroup.co/authors/pawel-zielinski/), Co-founder & Business Owner Last reviewed 10 October 2026 ## How energy procurement works In the EU a business can buy electricity from any supplier it chooses. Article 4 of Directive 2019/944 guarantees that freedom, and in Poland Article 4j of the Energy Law (Prawo energetyczne) gives every customer the right to buy energy from the seller of its choice. The network stays with the local distribution operator, so procurement is about the energy itself. Under Article 5 of the Energy Law the buyer signs either a sales contract plus a separate distribution contract, or one comprehensive contract that covers both. A sales contract has to state at least the delivery point, the volume for each contract period and the price or tariff group. A small company usually fixes one price for a year or two. A buyer spending hundreds of thousands of euros a year on energy has more options. With a fixed price the whole volume is priced at signing. In tranche purchasing the contract fixes the rules, and the buyer fixes the price of parts of the volume over time: each tranche is priced at the forward quotation of a product, such as the calendar-year baseload, on the day it is bought, or at the average quotation over an agreed period. Whatever is still open at delivery is settled at a spot or index price. Part of the volume can come from a [PPA](https://ordergroup.co/glossary/ppa/). To pick the supplier, the buyer or its adviser runs a tender: suppliers quote against the same specification, and the offers are compared line by line. Common procurement models ModelHow the price is setRisk the buyer keepsWhat the system tracks Fixed priceOne price at signingTiming of the signing, volume outside the toleranceContract price, volume toleranceTranchesEach tranche at the forward price on the day of purchase, or at an average over a periodPrice of the volume that is still openPurchased and open volume, simulated average priceSpot or indexDay-ahead or index price for each periodThe full market pricePrice feed and consumption per periodPPA plus residualPPA price for part of the volume, market price for the restProduction shape and residual volumePPA profile and residual position ## What energy procurement means for your software A procurement platform has to answer three questions every day: how much is already bought and at what price, what the rest would cost today, and whether the invoices match the contracts. That requires: - A position for every contract: expected volume, purchased volume and open volume, by product and delivery period. Users enter tranches in MW, MWh or as a percentage, so the system needs one internal unit, explicit conversion and a record of what the user typed. - A simulated price, recalculated every day: purchased tranches at their prices plus the open volume at current forward prices. - Tranche types beyond a single date, such as a tranche priced at the average of a product over a period, whose value changes daily until the period ends. - A budget price with validity dates and a change history. Calculations use the latest value, and the history keeps every earlier value for an audit. - Daily imports of market data from several sources, with public holidays, time zones and missing quotations handled. - A record of each decision: who recommended a purchase, on what grounds, who approved it and when. - Tenders in one offer structure, so different suppliers' prices, volumes and terms can be compared. - Invoice control: a shadow invoice calculated from the contract, the meter data and the distribution tariff, compared with the supplier's and the operator's invoices. Charges such as the [capacity fee](https://ordergroup.co/glossary/capacity-fee/) belong in it. - [Guarantees of origin](https://ordergroup.co/glossary/guarantees-of-origin/) bought with or alongside the energy, tracked for emissions reporting. Writing the specification? Add Energy procurement to your requirements checklist Collect the terms your project touches and get their system requirements in one e-mail, ready for an RFP. ## From our projects Since 2020 we have built Enerace.Online for [Enerace](https://ordergroup.co/case-studies/enerace-energy-trading-software/), an advisory that helps companies buy electricity and gas. The platform calculates each client's portfolio position from the contracts entered, which replaced spreadsheet calculations, and computes a simulated price for every contract from past purchases and the current market. Tranche purchases in MW came in 2021, and in 2022 we added MWh; the system converts both to a percentage of the contract volume. Also in 2022 we built tranches priced at the average quotation of a chosen product over a date range, for example 50% of the volume at the average price of the 2023 calendar-year baseload contract (BASE_Y-23 on TGE) between January 14 and October 30, 2022. The platform updates that average every day until the end date and ignores purchases entered before the averaging period. Later in 2022 budget prices got validity dates and a change history, and calculations always take the latest value. Consultants issue purchase recommendations with a rationale, the client accepts them in the platform, and each decision stays in the history. The tender module, built in three stages in 2024 and extended between September 2025 and January 2026, lets users review and compare supplier offers. Invoice control started in 2023 with a shadow invoice model and CSV imports of invoice and distribution operator data that the system compares with each other. Distribution costs were added in 2024 and invoice control reports in 2025. From our projects [Enerace - Custom-Made SaaS Web Application for Energy Procurement Advisory How the custom SaaS web application Order Group built for Enerace automates energy procurement advisory and supports buying decisions across Europe.](https://ordergroup.co/case-studies/enerace-energy-trading-software/) Where to get it - [Enerace](https://enerace.eu/offer/energy-procurement-recommendations) Enerace monitors the energy market for large buyers and recommends when to buy, tender or wait. We build and maintain its Enerace.Online platform. ## Related terms - [Capacity fee](https://ordergroup.co/glossary/capacity-fee/) A capacity fee is the charge end users pay to fund a capacity market. In Poland most business users pay it per kWh drawn in peak hours on working days, scaled down when their peak-hour consumption is close to their off-peak consumption. - [Guarantees of origin](https://ordergroup.co/glossary/guarantees-of-origin/) A guarantee of origin (GoO) is an electronic certificate, with a standard size of 1 MWh, that proves to a final customer that a given quantity of energy was produced from renewable sources. It is issued, transferred and canceled in a national registry and traded separately from the energy. - [PPA](https://ordergroup.co/glossary/ppa/) Power purchase agreement A PPA (power purchase agreement) is a contract under which a buyer agrees to purchase electricity directly from a producer on market terms, usually for several years and often from a named wind or solar plant. ## Read more on the blog - Article [Energy Trading Platforms: How They Work, Main Types and the Software Behind Them](https://ordergroup.co/blog/energy-trading-platforms/) - Article [Energy Trading: Risks, Rewards, and the Future of Power Markets](https://ordergroup.co/blog/renewable-energy-trading-risks/) ## Sources 1. [Directive (EU) 2019/944 on common rules for the internal market for electricity (consolidated), Article 4](https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:02019L0944-20240716) - EUR-Lex 2. [Ustawa z dnia 10 kwietnia 1997 r. - Prawo energetyczne, tekst jednolity Dz.U. 2026 poz. 43, art. 4j i 5](https://isap.sejm.gov.pl/isap.nsf/DocDetails.xsp?id=WDU20260000043) - ISAP Sejm RP Paweł Zieliński reviewed this entry. Ask how it applies to your project. [Ask an engineer](https://ordergroup.co/contact-us/) ## FAQ ![Paweł Zieliński](https://ordergroup.co/media/images/Pawel_p3bY6z4.format-webp.webp) Paweł Zieliński Co-founder & Business Owner [Talk to an engineer](https://ordergroup.co/contact-us/) ### What is tranche purchasing? Buying energy in parts, each at its own price. The price for the year is the volume-weighted average of the tranche prices and of the price at which the remaining open volume is settled. ### How is energy procurement different from energy trading? Procurement buys energy for the company's own consumption and manages the price risk of that consumption. Trading buys and sells to earn a margin and usually runs on an [ETRM](https://ordergroup.co/glossary/etrm/) system with positions, limits and settlement against counterparties. ### What data does energy procurement software need? Contracts with their price rules, consumption per site, daily forward and spot prices, the purchases made, and the invoices from the supplier and the distribution operator. Without meter data the system can neither forecast the open volume nor check invoices. ### What is a budget price? The energy price the company assumed in its budget. The platform compares the simulated price of each contract with it, so the buyer sees early whether the year will end above or below plan. Building a system that depends on Energy procurement? See how we build software for this domain, with case studies and the stack we use. [See Energy Hub](https://ordergroup.co/energy-hub/) Requirements checklist For each term we send the definition and what it requires from your software. 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