Fixed vs Flexible Energy Contracts – Which Is Right for Your Business?

In business energy management, the contract type you choose can have a big impact on your costs for years to come. There are two main types – fixed and flexible – and each has different benefits that suit different businesses risk appetites, size and budget.

We have delivered at E for Energy for many businesses throughout the UK to determine which was the most suitable procurement strategy particular to the market conditions 

1. How does a fixed energy price contract work? 

A fixed rate contract locks in your unit rates for a specified term — generally 1 to 3 years. This shields your business from pricing fluctuations and brings predictability to your budgeting.Pros: - Stable cost and more predictable forecasting

Pros:

• Protection against wholesale market price increases
• Suitable for small and medium-size enterprises with regular consumption

Cons:

• Won’t help you if prices in the market fall
• Termination charges may be applied if you terminate early.

2. What Is a Flexible Energy Contract? 

A pass-through (flexible) contract gives you the opportunity to access the market and purchase energy in tranches, enabling your business to benefit from market movements. Larger entities tend to go for this model as their large scale operations can absorb the risks and reap the benefits from falling wholesale prices.

Pros:

• Potential for lower costs if the market goes down
• More control over purchasing strategy
• Clear visibility into wholesale data

Cons:

• Vulnerable to price hikes
• Actively managed and requires market insight to maintain holdings

3. How to Select the Best Option 

The right advice depends on your organisation’s size, shape of demand and risk appetite. Fixed contracts are more popular with smaller consumers who seek certainty, while those with large energy needs might come out ahead with more flexible purchasing. 

E for Energy – We analyse your usage data, budget, and current market conditions to develop a procurement strategy that manages risk and maximises opportunity. 

Picking between fixed and flexible contracts is one of the biggest decisions that you need to make for your energy strategy. With professional advice from E for Energy, you can choose wisely and provide for both future stability and expansion.

Contact E for Energy today on 0115 902 9431 or visit www.eforenergy.co.uk for a free business energy review.