Buying business energy carries high-stakes. With thousands of pounds on the line, it’s easy to fall back on “the way we’ve always done it”. But what worked in the past could cost your business more than it should.
Many long-standing assumptions about energy contracts can leave businesses vulnerable to market volatility and inflated premiums. The result is that you could be paying far more than the true cost of energy (without even realising).
Here are the five most common mistakes businesses make when buying energy and how a new approach can help you adopt a more proactive energy strategy that saves you money in the process.
Mistake #1: Believing a fixed price is the best price
For decades, the standard advice has been to "fix and forget". The idea is simple: lock in a price today to protect your business from future market rises. In reality, this can often mean higher costs. Fixed rates include premiums to cover supplier risk baked into your price from day one. You may be stuck paying a higher rate for the duration of your contract, missing out on opportunities to save if the market drops. This prevents you from adapting to the market, forcing you to fight against volatility instead of working with it.
The fix: Don’t settle for a one-off gamble. Instead, choose a model that offers wholesale prices without fixing, so you can benefit from real-time market fluctuations rather than being locked into a single, inflated rate.
Mistake #2: Relying on long-term contracts for security
Long-term contracts (2-3 years or more) offer a sense of security and stability. Businesses chose them to avoid the hassle of frequent renewals and to protect against future price increases.
However, long-term contracts can often mean higher costs. While they may protect you from a price spike, they also stop you from capitalising on a price drop. If market prices fall significantly, you're locked into a contract that can't be changed without penalties. For growing businesses, this inflexibility can be a major liability. What if you open a new site or need to scale your energy usage? You may be stuck in a contract that no longer fits your needs.
The fix: Look for flexible business energy solutions. At Hedged, we offer energy on a rolling subscription in a UK-first. This gives you access to low cost energy, as well as the ability to adjust your energy requirements and scale your business without being stuck on a fixed rate.
Mistake #3: Misunderstanding contract terms and the fine print
This is one of the most common and expensive mistakes. Many businesses sign contracts designed for commitment without fully understanding the terms. Change is frequently penalised and it can be difficult to exit the agreement. While the needs of businesses have evolved over the last decade, energy contracts haven't. Complex pricing means the price you get to start with might be very different to the one you actually pay.
The fix: Demand transparency. Your energy provider should be able to offer a clear breakdown of every single cost, from the market price of gas or electricity down to the last unit. If you can’t see exactly what you're paying for and why, there’s a chance you’re overpaying.
Mistake #4: Overlooking long-term business strategy
Your business isn't static, so why should your energy contract be? A contract you sign today might not align with your business goals in a year or two. This is particularly true for businesses with sustainability goals or those undergoing rapid growth or contraction. And because many long-term contracts penalise reduced usage or site changes, even improving efficiency can result in higher charges.
The Fix: Choose a provider that offers the agility to adapt. The best energy plans should support your business strategy, not restrict it. You should be able to easily add new sites, scale your usage up or down or cancel without penalty.
Mistake #5: Failing to track market trends
Most businesses don’t have the time or resources to monitor the energy market every day. As a result, they often renew their contracts when prompted by the supplier, not when market prices are at their lowest. This reactive approach means businesses are constantly missing opportunities to secure lower rates, especially in today's volatile market.
The fix: Work with a provider that empowers you to be proactive. A solution that operates on wholesale prices and provides market agility allows you to take advantage of price dips and work with volatility, rather than against it.
There’s another way: Hedged
Every one of these common mistakes stems from the limitations of legacy energy contracts. Many businesses are so used to the system that they don't even consider there could be an alternative. This mindset is perhaps the most expensive mistake of all.
But there is another way.
Hedged is the UK’s first subscription product for businesses, designed to eliminate unnecessary costs and give you direct access to wholesale energy. With Hedged, you get total flexibility, complete transparency and wholesale prices, allowing you to use market agility to unlock thousands in savings.
Take control of your energy.
