2026 has been one of the most challenging years yet for CFOs and their teams. From stubborn inflation risks and ongoing market unpredictability to supply chain disruptions, organizations are desperate to find ways to maximize every dollar as budgets constrict. In response, CFOs across the business spectrum are expected to leave no stone unturned as organizations look to optimize their financial footing. One historically overlooked sector is emerging as a main target: power.
Processing Content
Thanks in part to factors such as surging AI power costs — data centers will account for
Much like the energy sector itself, the way power is procured — and the decision-making process behind it — is rapidly evolving. This poses headaches for even experienced insiders, let alone CFOs who are engaging with power procurement in a more intensive way for the first time.
Here are a few key considerations that CFOs need to keep in mind as they look to make sense of their shifting power-related workflows.
What does the power landscape look like today?
Buoyed by low natural gas prices — the legacy fuel used in power generation — and gradual and predictable rises in electricity demands, power has historically been one of the lower stress areas of organizational budgets. In fact, many organizations have managed their company’s energy needs on a very decentralized and “site-by-site” level.
However, as once-in-a-generation electrification demands have become a reality and natural gas prices have become unpredictable, power costs have skyrocketed. For example, according to the U.S. Energy Information Administration, average wholesale power prices jumped by
This all points to the fact that the power world is in the throes of a far-reaching structural reshape that is requiring organizations and CFOs to think about power in a much different way than they have in the past.
Rethinking procurement processes
Given power procurement has been a secondary priority for organizations and financial teams over previous decades, the processes that many teams leverage for procurement have changed very little over time. However, as power grows in importance, organizations are realizing that their procurement operations need a significant facelift.
For example, many organizations continue to leverage “traditional” processes for procurement, whereby a single broker provides a shortlist of quotes with very little clarity over exact prices and fees. As transparency and data-driven decision-making have become the lifeblood of many organizational functions, businesses have begun to realize this approach is no longer fit for purpose, and are looking to bring the same data-driven principles they are using in other areas to power procurement.
To this end, CFOs have begun to think outside of the traditional procurement avenues, embracing more sophisticated approaches powered by technology. This has given rise to auction-based approaches that allow organizations to see exactly which providers are bidding for their energy contract and what the actual cost of their power contracts will be in real time vs. a static opaque quote that is likely laden with ancillary fees and premiums. This approach has also enabled deals to close much more rapidly, helping CFOs better understand the real value of a contract and assess contracts in a way that fits much more accurately with overarching finance parameters or risk considerations.
Aligning energy strategy with financial strategy
CFOs are also not only having to contend with procurement operations and execution, but also how they are going to equip themselves and their broader teams with the specialized knowledge required for this new power procurement world. Power is a nuanced sector requiring specific insights into a variety of different sectors that many team members may only have cursory experience in.
How many energy suppliers actually competed? Were the bids based on the same product structure and contract assumptions? What fees, risk premiums or embedded margins were included? Was the organization comparing the market, or simply comparing a small set of quotes? These are just a few of the questions that financial teams need to have answers to and that could have significant implications for both their balance sheets and overall compliance and risk.
Financial teams will need to cultivate new pathways for collaboration with other organizational arms that may not have existed before. For example, CFOs may need to create new workflows with sustainability stakeholders to assess how a potential contract aligns with internal and external ESG reporting requirements, or with facilities and data teams to get a better idea of site-level power needs to build more effective multisite portfolios and strategies. Moreover, financial teams will need to build more proactive workflows around power procurement as well. Teams that are able to collaborate internally and work proactively on contracts in advance of their expiration have better chances of capitalizing on market opportunities and locking in favorable prices.
Turning power from a cost center into a value lever
The most effective CFOs are not looking at energy simply as a bill to be paid. They are looking at it as a category to be managed with the same discipline as any other major financial exposure.
That means better data. Better timing. Better contract structure. Better internal alignment. And better visibility into how procurement decisions affect the broader financial plan.
As electrification accelerates and power demand continues to grow, energy will only become more important to CFOs and their teams. Those who modernize their approach can reduce budget risk, improve forecasting and unlock savings that flow directly to the bottom line.
For CFOs, the mandate is clear: Power is no longer a back-office operating expense. It is a strategic financial decision — and one that deserves a permanent seat on the finance agenda.
Credit: Source link
