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Last updated October 2026.
Three contract structures
| Structure | How it works | Suits | Watch for |
|---|---|---|---|
| Fixed | Whole unit rate fixed for the term, including network and policy costs | Most SMEs; anyone who values certainty over price | Premium for certainty; no benefit if wholesale falls |
| Pass-through | Energy element fixed; network and policy charges passed through at cost as they change | Medium and larger sites wanting a slightly lower price and willing to take some cost movement | Budget variance from network and policy changes each April |
| Flexible | Energy bought in portions over the contract period against a buying strategy | Sites above roughly 500 MWh a year, or portfolios | Needs a policy, a decision-maker and someone watching the market |
The right structure follows from the size of the spend and the organisation’s appetite for variance, not from what the last contract was. Many businesses on fixed contracts could do slightly better on pass-through; many on flexible contracts would be better off fixing, because nobody is actually executing the strategy.
Timing the market
Nobody reliably predicts wholesale energy prices, and a strategy that depends on doing so will fail. What a procurement strategy can do is avoid the known bad outcomes: renewing in the last week before expiry when options are few, buying everything on one day, and lapsing onto out-of-contract rates. Fixed contracts can be priced up to a year ahead, so a business with a renewal next October can take prices now, in the spring and in the summer and sign whichever looks right, rather than taking what September offers.
For flexible contracts the discipline is a written hedging policy: what proportion to have bought by when, triggers for buying more, and who decides. The point of the policy is to remove the daily temptation to wait for a better price.
Talk it through with us
Send us a recent bill or a quick description of your sites and we will tell you plainly what applies to you and what it would involve. No obligation.
Aligning a multi-site estate
Our multi-site business energy page covers the mechanics and business energy procurement the wider strategy. Validation, covered under energy invoice validation, provides the consumption data a tender is priced on.
Thornton Facilities Management
Thornton weren’t unhappy with their supplier. They wanted proof the renewal rate was competitive before committing to five years. The comparison saved over £320,000. Read the case study.
Frequently asked questions
What is the difference between fixed and pass-through energy contracts?
Fixed locks the whole unit rate including network and policy costs. Pass-through fixes the energy element and passes network and policy charges through at cost, which is usually slightly cheaper and slightly less predictable.
When should a business consider a flexible energy contract?
Typically above about 500 MWh a year per site or across a portfolio, and only with a written buying policy and someone to execute it.
How far ahead can we fix a business energy price?
Most suppliers will price a renewal up to twelve months ahead, which lets you take several quotes across the year rather than one in the final month.
How do we align contract end dates across sites?
With short bridging contracts or co-terminous renewals over one or two cycles, then tendering the estate as one portfolio.
What is a hedging policy?
A written rule for flexible contracts setting what proportion of energy should be bought by when, the triggers for buying, and who decides.
Does Clearsight Energy help with procurement strategy?
Yes, as part of our consultancy work for larger and multi-site businesses, and we run the tenders and manage the contracts that result.
Need help? Get in touch
Call us on 020 8036 5715, or email us, and we will take it from there.