Flexible vs Fixed energy contracts: What’s right for 2026? 

Despite prices moving back down from the highs of the energy crisis, the energy market is continuously subject to sudden price movements – driven by factors such as the weather, geopolitical tensions and global supply and demand.

Every organisation should have a well-defined energy procurement strategy – tailored to your requirements and flexible enough to respond to an ever-changing market.  

How and when you buy matters: You should be in the market looking at your renewal no less than 18 months ahead of your contract expiring to make the most of the dynamic market. Price data shows that businesses who have longer purchasing horizons tend to achieve lower price outcomes than those with shorter buying windows.  

So, what is right for 2026? To answer this, let’s look at two most common solutions in more detail: Fixed and flexible contracts.

How can you make informed energy procurement decisions?

First, it’s important to note that each procurement option comes with considerations, advantages and disadvantages and is dependent on your organisation’s appetite for risk. 

Furthermore, it’s important to determine what your organisation’s priorities are:

• Do you seek budget security?  
• Do you want your strategy to reflect your wider sustainability ambitions by only procuring renewable energy?  
• Do you want to take advantage of the whole market – even if it requires making decisions at short notice?  

However, one fact remains regardless of market conditions: Making informed energy procurement decisions requires thoroughly evaluating the options available to you. 

What are fixed energy contracts?

A popular choice for organisations aiming to minimise exposure to market volatility and achieve a high level of budget predictability, a fixed contract locks your energy unit rates in for its duration. 

A fixed contract helps to stabilise a large portion of your energy spend and offers more price certainty than flexible arrangements. If the market was to change suddenly and suppliers increased their prices, your bill would not change.  

However, there are different types of fixed products – some with more complete budget certainty and some where suppliers reserve the right to pass through increases.   

Additionally, fixed price contracts include a risk premium to protect suppliers against unforeseen shifts in the wholesale market.  

The risk of a fixed contract is taking up one at the wrong time – and this risk increases when you let your existing contract run close to its expiry.  

However, you can help minimise the financial risk by working with a market expert with as long a buying window as possible. 

What are flexible energy contracts?

A flexible contract allows organisations to take advantage of market movements and spread the risk associated with energy price volatility across multiple purchasing points. 

This type of contract gives you complete visibility over the various supplier and industry costs, as well as the raw cost of your gas and electricity. 

Choosing a flexible risk managed contract means you will make several purchasing decisions throughout your contract – the price you pay depends on the market at the time of purchase. 

One of the solutions organisations can leverage to mitigate the risk of adverse price movements is hedging.   

While flexible procurement offers greater control and the potential for cost savings, it can be more complex to manage. Available options can also be more limited for smaller energy users.  

However, an expert energy partner can create a bespoke risk management strategy which defines the level of risk your organisation is comfortable with, helping you make informed decisions within agreed parameters.