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The majority of business energy contracts are what is known as ‘Fixed’, that is they run for a fixed period and at a fixed price. But there is another way for businesses to access the energy market.
Whilst it is more involved, more 'niche' and traditionally aligned to larger businesses there are some tangible benefits to be gained from entering a flexible deal.
How do flexible deals work?
In effect, the 'profile' or the predictable shape that the customer's requirement trend would look like is split or 'blocked' into two broad categories of shape. These are Baseload and crest.
The wholesale energy market trades such as volume in set blocks. Because of the individuality of a business’ usage, the matchup between these blocks and the customer profile will not be perfect.
As a result, the customer will buy a block of energy which may in parts go beyond their usage profile, for instance their business may slope up activity earlier than the traditional energy block starts.
All is not totally lost however as to where the purchased base load and peak volumes exceed the customer’s profile this can be sold back to the supplier.
Conversely, where the customer’s volume purchases are insufficient to cover their demand profile the customer will need to purchase extra volume in smaller blocks. These 'buys' and 'sells' than average out to form the overall residual price or in other words the energy price the customer will pay for any given period.
A flexible contract:
A flexible contract:
Given the above, Flexible Priced contracts are clearly not for everybody by any means but with the advent of smart metering and the promise of smart grids variations on this theme will become more prevalent.
Though if your business has the quantity, profile, manpower, proficiency, and appetite for risk to manage and sustain a flexible deal then it is a very attractive way to go.
Management is key however as a deprived decision or no decision can have a very significant effect on cost, a risk you avoid with fixed price deals.
If a flexible deal sounds beneficial for your business or you would like to find out more about our business energy plans simply call us on 08000488472, we'd love to hear from you.