If your energy contract ends in 2027, the decisions you make in the next few months will shape your costs for years. Yet many organisations approach renewal the same way: wait for the renewal letter, compare a handful of quotes and choose one.
There is a better way to think about it, and it starts with understanding what you are actually choosing between. Not suppliers. Strategies.
What a fixed price contract really buys you
A fixed contract locks your unit rates for the full term, typically between one and five years. Ofgem has noted that business contract lengths are starting to return to three to five years. The appeal is clear: your unit rates and standing charges are known in advance, so your bill moves only with how much you use. It is worth checking whether a contract is fully fixed or passes through changes in network and policy charges.
For organisations where energy is a meaningful but not dominant cost line, and where the finance team values predictability over optimisation, certainty may be worth more than the chance of a lower average.
But fixed has a cost that rarely appears in the quote. You are paying the supplier to carry market risk for you, and suppliers do not carry risk for free. That risk premium is built into the rate. Fix at a market peak and you carry that price for the whole term.
The question that matters
Not "what is the cheapest rate today" but "what does it cost my organisation if energy spend is 20% over budget next year". If the answer is serious pain, certainty has real value and fixed is doing work for you.
What flexible procurement actually involves
Flexible, or risk managed, procurement splits your volume into tranches bought ahead of delivery on the wholesale market. Instead of relying on one signing day, you build a position across many buying decisions and are billed at the volume weighted average price of those purchases, guided by a strategy that sets when to buy, how much, and at what trigger points. That average covers the energy part of the price only. Network, policy and supplier charges are added on top.
Done well, it reduces the risk of the worst outcome in energy buying: fixing your entire load at a market peak. Done badly, or without a written risk strategy, it becomes speculation with your operating budget. The discipline is the product.
The right strategy is not the one with the lowest headline rate. It is the one your board can defend in twelve months, whatever the market has done.
Three questions worth asking before you decide
1. How material is energy to your cost base?
Flexible contracts are generally designed for large energy users. For smaller annual spend, the cost of managing a flexible strategy may outweigh the benefit, and a well timed, well benchmarked fixed contract may suit better. Into the hundreds of thousands of pounds a year and beyond, especially across multiple sites, tranche buying may be worth a closer look.
2. What is your real tolerance for variance?
Not your appetite for savings. Your tolerance for the bad year. If a 15% overshoot would trigger difficult conversations, certainty may be worth more. If your organisation can absorb variance in pursuit of a better average, flexibility deserves a look.
3. Who is accountable for the decision?
Flexible strategies need someone watching the market and executing the plan. That is either an internal resource or an adviser with a documented mandate. If neither exists, a flexible contract is a promise nobody is keeping.
Where does your current contract sit?
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Request a benchmarkThe hybrid many people miss
This is not a binary choice. Some larger organisations fix a base load for certainty and run the balance flexibly, taking market opportunity on the margin while protecting the core budget. The right split depends on your consumption shape, and it is the kind of decision an independent adviser should model for you rather than sell to you.
Timing matters
Whichever route you choose, when you engage matters. Starting twelve months before contract end gives you time to be selective about when to buy. Starting six weeks out leaves you with whatever the market is offering on the day. For a renewal in 2027, that twelve month point is already here or close.
The market will do what it does. Your strategy is the part you control.
Market levels in the chart are illustrative and based on the market as at 16 July 2026; prices have moved since. This page is general information, not advice on your specific circumstances. Outcomes depend on market conditions and your own contracts, so it is worth confirming the detail before making a decision.