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Every brewery owner knows the feeling: you’ve just reviewed your monthly utility bills, and energy costs are eating into margins that should be funding growth, new equipment, or expanded distribution. While you can’t brew beer without energy, you can dramatically reduce what you pay for it through strategic procurement.
This guide breaks down exactly how successful breweries are cutting energy costs by 30-50% through smarter buying strategies—without any equipment changes or production compromises.
Most brewery owners don’t realize they’re overpaying for energy by thousands of dollars annually. Default utility rates—what you pay when you don’t actively choose a supplier—can be 8-16% higher than competitive market rates on average. For a mid-sized brewery producing 5,000 barrels annually, this difference can mean $10,000-$20,000 in unnecessary costs.
The urgency around energy procurement has intensified due to three converging trends. Default utility rates have increased over the past three years – with MetEd’s commercial price to compare rising over 9%, and PPL’s over 30% – making the penalty for inaction steeper than ever. With over 9,500 breweries now operating in the U.S., competition for market share means every dollar saved on operations directly impacts your ability to compete on price and quality. Finally, energy market volatility has reached new heights—without fixed-rate contracts, you’re exposed to seasonal price spikes that can devastate carefully planned budgets.
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Before optimizing procurement, you need to understand what you’re actually paying for. Your energy bills contain three main components that each require different management strategies.
Take a moment to consider whether you’re on default utility supply rates. If you are, you’re almost certainly overpaying. Do your rates change seasonally without warning? Have you compared rates from multiple suppliers in the last 12 months? Do you even know your current price per kWh or therm?
If you answered “no” to any of these questions, you have immediate savings opportunities waiting to be captured.
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Fixed-rate contracts allow you to lock in a specific rate for a predetermined period, typically 12-36 months. This approach works best for breweries wanting predictable budgets, operations planning expansion, and risk-averse owners who value stability over potentially lower but variable costs.
Shipley Energy recently helped a Pennsylvania brewery with a fixed rate contract for both their electric and natural gas – saving them over $29,000 compared to the utility.
While fixed rates might be slightly higher than current spot prices during low-demand periods, they protect against the volatility that can wreak havoc on brewery budgets during peak seasons.
Variable or indexed rates fluctuate monthly based on market conditions, following wholesale energy prices up and down. This option suits breweries with flexible budgets, operations that can shift production schedules based on rates, and owners comfortable with some risk for potential savings.
The key to success with variable rates is active monitoring and the budget flexibility to absorb periodic price spikes.
Blended strategies combine fixed and variable components, such as securing 70% of your expected usage at fixed rates while leaving 30% on variable pricing. This sophisticated approach works well for medium to large breweries seeking both stability and upside potential – especially when planning for expansion.
Block-and-index products let you purchase blocks of power at fixed rates for expected usage, with additional needs met at index (market) rates. This structure is ideal for breweries with predictable baseline consumption but seasonal variations, or facilities planning phased expansions.
This approach provides the budget certainty needed for baseline operations while avoiding overpaying for capacity you might not use. It’s particularly effective for breweries that see significant seasonal swings in production.
Electricity procurement follows predictable seasonal patterns. The optimal windows are March-April and October-November during shoulder seasons when demand is moderate. Avoid June-August when peak cooling demand drives prices up, and January-February when heating peaks create volatility. Smart breweries monitor markets in late winter for spring purchasing opportunities.
Natural gas follows a different cycle. Late spring (May-June) offers the best rates as the heating season ends and storage levels rebuild. Avoid November-January during peak heating season when prices typically spike. The strategy here is simple: lock in summer rates for the following winter’s needs.
| Contract Length | Advantages | Considerations | Best For |
|---|---|---|---|
| 12 Months |
|
|
New breweries or those planning major changes |
| 24 Months |
|
|
Most mid-sized breweries (most popular choice) |
| 36 Months |
|
|
Established breweries with stable operations |
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If you’re adding tanks, canning lines, or expanding facilities within 18 months, your energy procurement strategy needs to accommodate growth. Include growth provisions in contracts that allow for increased usage without penalties. Negotiate blend-and-extend options that let you modify contracts as needs change. Consider shorter initial terms with extension options, giving you flexibility while maintaining some price protection. Most importantly, discuss capacity increase thresholds with suppliers upfront—you don’t want to discover limitations when you’re ready to grow.
Operating multiple locations or planning additional facilities opens up unique procurement opportunities. Aggregating usage across locations almost always results in better rates, as suppliers prefer larger, more predictable loads. Negotiate master agreements that provide flexibility to add or modify individual sites while maintaining favorable pricing. Standardizing contract terms across locations simplifies management and ensures you’re not leaving savings on the table at any facility. Centralizing energy management decisions prevents individual location managers from making suboptimal procurement choices.
Many breweries see 40% higher production during summer months, and your procurement strategy must reflect this reality. Structure contracts to accommodate seasonality without triggering overage charges or penalties. Seasonal block purchases can help you lock in favorable rates for predictable high-production periods while maintaining flexibility during slower months.
The key is negotiating bandwidth that reflects your actual variation—not the supplier’s standard offering. Avoid contracts with strict minimum usage requirements that could result in paying for energy you don’t use during slower periods. Instead, look for suppliers who understand the brewing industry’s seasonal patterns and offer contracts designed for this reality.
Energy procurement isn’t complicated, but it does require attention and strategic thinking. The breweries winning in today’s competitive market treat energy as a manageable input cost, not an unchangeable fixed expense.
The difference between overpaying and optimizing can fund expansion, equipment upgrades, or simply improve your bottom line. Every month you delay is another month of leaving money on the table. While the best time to optimize your energy procurement was yesterday, the second-best time is today.
Smart energy procurement is one of the few business improvements that requires no capital investment, no operational changes, and no risk to product quality—yet can deliver immediate, substantial savings. In an industry where margins matter and competition is fierce, can you afford not to take action?
Ready to reduce your brewery’s energy costs? Shipley Energy helps breweries throughout Pennsylvania, Ohio, and Maryland with strategic energy procurement. Contact our commercial energy team at 717-771-0772 for a free energy savings assessment.
