Energy Contract Types

There are two main energy contract types, fixed and flexible. These are sourced through energy suppliers and include a variety of energy service and tariff agreements. Deciding between different types of business energy contracts, for large users especially, requires a careful consideration of the options. The contract best suited for your business depends on your individual requirements such as energy use patterns and budgetary demands.

Fixed Energy Contracts

The most common way to purchase energy, a fixed energy contract allows you to lock in an energy price for the length of your contract. Fixed contracts are ideal for businesses who want to control their energy costs but have a set budget. You are also locked in to doing business with your chosen supplier, as you will likely pay a fee for ending the contract early if need be. Read more about Fixed Energy Purchasing.

Flexible Energy Contracts

A tailor-made, risk-managed flexible strategy can provide forecasting certainty on the best times to buy. A flexible contract lets you take advantage of fluctuating wholesale energy prices, allowing you to purchase energy at the most advantageous time and get the best market rates. Read more about Flexible Energy Purchasing.

Fixed & Flexible (Combination)

With flexible contracts the consumption baseline is predicted over the supply period. The more consistent your consumption pattern is, the lower the risk is for the remainder of your trading blocks of energy. Combining fixed and flexible contracts provides a solution between the two differing methods. Nationwide Utilities can analyse the consumption for all your sites breaking down the consumption into manageable blocks and identifying the components that could be reduced by energy management systems. The data from this analysis can identify the sites where consumption is predictable and the baseline is more constant and put a flexible procurement plan in place.

Energy purchasing graph - The possibility of a hybrid of the two energy purchasing solutions would be to split your portfolio, putting the fluctuating sites on a fixed rate secured at a desirable rate whilst leaving sites that have a stable consumption on a flexible plan to ensure that dips in the market can be appreciated providing financial benefit.

It can be challenging to find the balance between budget risk and market risk when it comes to choosing your energy contract type. If you have fixed a price, you have market risk. After you fix your contract, energy prices may go down. If this happens, you won’t receive the lower price. If you are on a flexible contract you have budget risk and energy prices could rise above your budget projections. Choosing a business energy contract type is a complex decision, but Nationwide Utilities can help you find the solution that works best for you. We secure electricity and gas on a range of different contract types which suit many different types of businesses.

To receive a bespoke business energy analysis enquire here or call us on 0800 862 0861.

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