Energy bills are one of the largest overheads for UK businesses, and with market volatility continuing, many owners are asking whether now is the right time to fix their business energy prices. Fixing your contract means securing a set unit rate for electricity or gas over a defined period, usually 1–5 years. This can be an effective way to gain certainty, but it isn’t always the cheapest option.
What does fixing your business energy price mean?
When you fix your energy contract, you lock in a price per kilowatt-hour (kWh) for the duration of the agreement. This protects your business against market spikes and makes forecasting easier. However, if wholesale prices fall, you could end up paying more than businesses on variable contracts.
Advantages of fixing business energy prices
- Budget certainty – predictable bills make it easier to plan cash flow.
- Protection from volatility – avoids sudden price hikes caused by market conditions, geopolitical events, or supply issues.
- Long-term savings potential – if you fix during a dip in the market, you could benefit for years.
- Negotiation leverage – suppliers often offer competitive fixed-rate deals to win longer commitments.
Risks and drawbacks
- Missing out on lower prices – if wholesale costs drop, you remain tied to higher rates.
- Exit fees – breaking a fixed contract early can involve substantial penalties.
- Reduced flexibility – long-term deals may limit your ability to switch suppliers when better tariffs appear.
When might fixing be a good idea?
- If your business relies on tight budgeting and cannot absorb sudden cost increases.
- When market forecasts point to rising energy prices over the next 12–24 months.
- If you value stability and certainty over potential short-term savings.
When might it be better to avoid fixing?
- If analysts expect wholesale prices to fall, leaving fixed contracts less competitive.
- If your business expects to scale up or relocate, making contract flexibility more important.
- If you are close to the end of a government-supported scheme or subsidy, which might influence costs.
Typical contract lengths and options
- 1-year fixes – provide certainty without long-term lock-in.
- 2–3 year fixes – popular for SMEs seeking stability but some flexibility.
- 4–5 year fixes – suitable for businesses wanting long-term predictability, though the risk of overpaying increases.
Final verdict
Fixing your business energy prices can provide peace of mind and stability, especially in a volatile market. However, it is not always the cheapest route. The right decision depends on your risk appetite, growth plans, and market timing.
For most SMEs, the safest approach is to compare multiple business energy suppliers, review independent market forecasts, and consider professional advice before signing a contract.
FAQ – Fixing business energy prices
Not always. Fixing protects you from sudden price rises, but if wholesale costs drop, you may end up paying more than those on flexible contracts.
Most suppliers offer fixed terms between 1 and 5 years. Shorter fixes give more flexibility, while longer terms lock in stability but carry more risk if prices fall.
Yes, but most suppliers charge exit fees. These can be costly, so it’s important to weigh flexibility against certainty before committing.
Generally, when wholesale prices are low or if market forecasts predict increases. Timing is key, so comparing rates regularly helps secure the best deal.
Many small businesses benefit from fixing, as it provides budget certainty and protection from volatile bills. However, the decision depends on cash flow, risk appetite, and future growth plans.