Flexible Energy Purchasing vs Fixed Energy Purchasing
There are pros and cons to both flexible and fixed energy procurement and knowing which one is right for you depends largely on your business and your appetite for risk. In essence, Fixed Energy Purchasing locks in all your volume in one go, while Flexible Energy Purchasing allows businesses to buy days and months ahead.
Fixed energy contracts can minimise risk, provide some certainty and deliver predictable budget projections provided that consumption remains within the defined contract levels. There is potential for the energy market to dip lower than the price you locked in at, but similarly the opposite is true as well.
Flexible energy contracts require robust energy purchasing policies, strategies and the right risk management tools. They follow the energy market with the aim to purchase at the lowest possible point to maximise savings. Unlike fixed contracts, where all volume is purchased at a single point, flexible energy is purchased at several points throughout the year –hedging against the market dropping or climbing further.