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Being a decision-maker in the European energy sector today presents serious challenges: ensuring supply security, complying with increasingly strict ESG regulations, while operating profitably. All this in a market where drastic price fluctuations rewrite previous business models on a daily basis.
The stakes: More than half of CEE region energy companies believe that the current operational model based on manual processes cannot be sustained in the next decade. In Hungary, the situation is particularly critical: import dependency and EU green transition goals create pressure to establish transparency and efficiency, where CSRD regulations place serious sanctions on non-compliance. According to Hungarian law, from 2026, the SZTFH can impose fines up to 1% of net revenue, with a maximum of 50 million forints.
The procurement function of a modern energy company is no longer an administrative support area, but a strategic risk management center. This role comes to the forefront in four critical areas:
Reducing import dependency is not just a strategic goal, but a business necessity. Alternative suppliers typically offer solutions at 30-40% higher prices, while existing long-term take-or-pay contracts are legally binding. This situation creates a decision-making environment where the complexity of procurement decisions far exceeds the capacity of traditional methods.
AI-based multi-sourcing platforms can model procurement scenarios that handle this complexity and support informed decision-making between dependency reduction and cost-effectiveness. The real challenge: what tools and what timeline can achieve diversification while keeping the organization competitive.
From 2025, compliance means that the company is responsible not only for direct suppliers, but also for their suppliers – 3-4 levels deeper in the supply chain. This requirement represents a paradigm shift in procurement processes. Validated ESG data must be collected, documented, and made auditable from hundreds or even thousands of suppliers. With manual methods, this task is simply not a realistic undertaking.
Blockchain technology is becoming one of the most secure and transparent tools in ESG data collection and auditing, which is particularly important in an environment where documentation errors directly lead to financial and reputational consequences, and where regulatory oversight is increasingly strict and investor expectations are increasingly high.
In the first eight months of 2025, negative or zero electricity prices occurred in Hungary more than 300 times – a dramatic increase compared to previous years (96 hours in 2023, 306 hours in 2024). This is evidenced by HUPX market data and Portfolio.hu analysis. At the same time, gas prices can multiply from one day to the next. This extreme volatility requires a completely new risk management approach.
With an annual procurement volume of 10 billion forints, current Excel-based hedging strategies represent a 15-20% price risk exposure, which can manifest in 1.5-2 billion forints of potential losses. Real-time integration of market data and predictive modeling are now fundamental conditions for financial stability. The era of post-analysis is over – decisions must be made simultaneously with market movements.
A significant portion of critical components comes from Asian manufacturers, often through 3-4 supplier levels. A single unknown sub-supplier's bankruptcy or a trade restriction can immediately halt billion-forint projects. The Colonial Pipeline 2021 case demonstrated this vulnerability well: the DarkSide ransomware group's attack shut down the pipeline for 5 days, causing panic buying and fuel shortages on the US East Coast.
The energy sector is critical infrastructure, where every supply disruption becomes a national security issue. The purpose of modern supply chain monitoring systems is early forecasting, although warning time varies significantly depending on the type of supply disruption and the quality of available data. The point: the organization should be notified of the problem when there is still time to seek alternative solutions.
An average PPA (Power Purchase Agreement) is a 100+ page document with milestones, efficiency guarantees, force majeure clauses, and pricing formulas – all for 20-30 years ahead. A missed contractual deadline can mean 1-5% project value penalty, which for a 10 billion forint investment means 100-500 million forints. Most organizations still track these contracts in a fragmented manner, without a central repository. Modern contract management provides a comprehensive solution to this complexity:
Transparency in this area is both an efficiency issue and a tool for managing personal leadership responsibility. In Hungary, a significant portion of public procurement is single-bid, which is a particularly exposed area from a compliance perspective. A digitally documented, auditable procurement process protects the decision-maker and the organization during subsequent audits. This is both legal protection and documentation of professional integrity.
While international competitors use AI-based predictive analytics and automated processes, a significant portion of domestic energy companies still plan and document with manual methods. This difference is measurable and accumulates year by year. Digitized organizations typically have more efficient operations, faster decision-making, and lower cost bases.
The 10-15 year ERP contracts, closed systems, and limited integration capabilities not only represent direct costs but also create structural innovation constraints. Vendor lock-in situations prevent the adaptation of new technologies, slow organizational transformation, and increase operating costs in the long term. The accumulation of technical debt becomes so severe at some point that catching up with competitors is no longer a cost issue but a time issue.
The classic trilemma of the energy sector – supply security, affordability, sustainability – remains unresolved today. According to the World Energy Council's Energy Trilemma concept, simultaneous optimization of the three goals requires complex trade-off decisions.
The risk of stranded assets illustrates this complexity well. Fossil fuel power plants may become worthless 15-20 years earlier than planned due to the green transition, while overly rapid renewable investments cannibalize each other in the market. Portfolio optimization cannot be managed professionally without integrated data and predictive analytics – and this is precisely the area where traditional methods show the greatest weakness.
The implementation of modern procurement and process management systems is a strategic shift from reactive crisis management to proactive risk management. The real value lies in the organization's ability to be prepared for unexpected events:
Digitized organizations make decisions faster, operate with lower operating costs and higher security levels. The essence of the Software with Service model is that the organization doesn't have to struggle with changes alone. Expert support during and after implementation ensures the agility needed for technology to be an engine of growth.
Companies that digitize their processes now, diversify their supplier bases, and proactively manage risks will not only survive the transition period but emerge stronger from it. The question to consider is whether we continue on the familiar but increasingly risky path, or take control of our own processes.
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