Guide
Fixed vs flexible energy contracts: which is right for your business?
The two main ways UK businesses buy energy, explained without jargon — including the honest downsides of each, and who each one actually suits.
Side by side
The real differences
Neither structure is 'better' in the abstract. The right answer depends on your usage, your appetite for risk and how much time you want to spend thinking about energy.
What you agree
Fixed: A unit rate and standing charge that stay the same for the length of the contract.
Flexible: A framework for buying energy in chunks over time, so the price follows the market.
Budget certainty
Fixed: High. You know the rate for the whole term, which makes forecasting straightforward.
Flexible: Lower. Costs move with the market — good when prices fall, painful when they rise.
Who it usually suits
Fixed: Most small and medium businesses that value certainty and don't want to watch markets.
Flexible: Larger users with the volume, appetite and resource to manage market exposure.
The main risk
Fixed: Locking in at the wrong time and paying above a falling market for the rest of the term.
Flexible: Rising markets pushing costs up with no cap, plus the time needed to manage it properly.
Flexible contracts are not available to every business. Suppliers set minimum consumption levels and credit requirements, and for many smaller businesses a straightforward fixed contract is genuinely the better tool. Be wary of anyone who presents flexible purchasing as the obvious choice for every SME.
In plain English
'Flexible' covers several different structures
When a supplier or broker says 'flexible', ask which of these they mean — they behave very differently.
Fully fixed, all-inclusive
Everything — energy and non-energy costs — is wrapped into one rate for the term. Simple and predictable, but you pay a premium for that certainty and benefit from none of the falls.
Pass-through
The energy element is fixed, but non-energy costs (network charges, levies and policy costs) are passed through at cost as they change. Usually cheaper than all-inclusive, but the non-energy share of the bill can still move.
Flexible purchasing
Energy is bought in tranches across the contract period rather than all on day one. Decisions about when and how much to buy have real consequences, which is why it normally suits bigger users with someone actively managing it.
Pros and cons
The honest version
Fixed contracts
- The rate can't rise during the term, whatever the market does
- Simple to budget around and simple to manage
- Widely available to businesses of all sizes
- If the market falls, you stay on the higher rate until the term ends
- Fixing at the wrong moment can lock in a poor rate — timing matters
Flexible contracts
- You can benefit when market prices fall
- Buying in tranches spreads the risk of one bad fixing day
- Pass-through options avoid premiums built into all-inclusive rates
- Rising markets push costs up with no cap
- Needs active management and enough consumption to qualify
- More complex to budget, report and explain internally
Quick sense-check
Which direction do your answers point?
Three questions, thirty seconds. This is general guidance only — it isn't personalised advice, and a proper recommendation always needs your actual usage and contract dates.
A word on advice
What a broker actually does here
A good broker doesn't just email you three prices. We look at when your contract ends, how you use energy, what's happening in the market and what the different contract structures would mean for your bills — then explain the trade-offs in plain English so the decision is yours. No structure is right for everyone, and nobody can guarantee where prices go next.
Not sure which structure you're on now?
Send a recent bill and we'll tell you what you're signed up to, when it ends and what your options look like — in plain English.