For years, the energy market has revolved around one idea: locking businesses into long-term contracts.
Contracts were designed for supplier security, not agility – and they simply don’t reflect how businesses operate anymore.
The logic once made sense. In a stable world, multi-year deals gave both sides predictability. But today’s world is anything but stable. Prices change by the hour. Operations evolve monthly. Yet businesses are still expected to commit years in advance to agreements built for a bygone era.
We’ve seen this pattern before. In the late 20th century, home entertainment was built around Blockbuster: physical DVDs, finite rental periods and late fees. Then Netflix reframed the entire system around access, flexibility and data. They didn’t ask, “How do we make video rental stores better?” Instead, “Why are we doing it this way at all?”
The energy market is still operating in its Blockbuster era: built around commitment, control and long-term lock-ins. The real cost to businesses comes from the premiums baked into these contracts – prices designed to protect suppliers, not to serve the customer. But businesses are living in a Netflix world. They need adaptability, immediacy and real-time decisions. They need to pay for the energy they use, not all the extra margins and risk premiums the supplier passes onto them.
And the truth is, these legacy systems still exist mostly out of habit.
The problem with ‘fixing’
The first issue lies with fixed contracts. Traditionally, you agree to a fixed price and let it run its course. That worked fine when markets were stable. But the only thing we can predict about the market today is that it's unpredictable. In just the past few years, we’ve seen a global pandemic, regional conflicts and extraordinary volatility in energy markets. The world we operate in today looks very different to the one these contracts were built for.
The cracks became painfully obvious during the 2022 energy crisis. Businesses on fixed rates still paid more because suppliers built in risk premiums, or worse, adjusted rates mid-contract when markets moved against them. Some suppliers couldn’t sustain those deals and cancelled contracts entirely, in breach or under force-majeure conditions, leaving businesses stranded on punitive deemed rates. Even those that managed to fix for stability were locking in during record-high market conditions. When prices later dropped, they were trapped paying inflated rates, often with exit penalties attached.
And even a fixed price isn’t truly fixed. Non-commodity costs (NCCs), which make up a substantial portion of bills, still fluctuate outside of the fixed price. All of this means the real cost of energy is often far higher than the headline rate on your contract.
It’s a frustrating system that can leave businesses feeling powerless. Fixed contracts don’t just fail to always protect businesses, they can punish those trying to survive in a volatile market. The system rewards rigidity over cost efficiency, and that’s exactly why businesses need a new way of thinking about energy.
A broker model
The energy market has a reputation for being complex. But let’s be honest: some of that complexity is deliberate.
The less access businesses have to transparent data, the more they depend on intermediaries – brokers who act as gatekeepers to the wholesale market. While many provide valuable services like bill validation and reporting, their incentives often align with securing longer-term contracts rather than flexible outcomes.
Mid-sized energy consumers feel this most keenly. They consume too much to be treated as small businesses, but not enough to interest brokers who chase larger margins. It’s a classic catch-22: the businesses who could benefit most are the ones locked out.
The good news is that technology is catching up. AI-driven platforms and data tools can deliver the same accuracy and insights without the commission structure or bias. Brokers used to be the only path to wholesale – now, they’re just one option, not a necessity.
Inflexibility built in
Old contracts weren’t built for agility.
They assume businesses stay the same, when in reality they grow, shrink, pivot and innovate constantly.
Let’s take expansion as an example. Adding a new site often means renegotiating or creating a brand-new agreement. It’s slow, frustrating and sometimes expensive. Every penalty, extra contract, or volume adjustment adds cost. And if a business needs to downsize or close a site? Exit penalties can hit them at the worst possible time.
Even sustainability efforts can backfire. Invest in solar panels, reduce your usage and suddenly you’re below your contracted threshold triggering penalties under volume tolerance clauses. This system actively punishes efficiency, inflating costs when businesses try to reduce energy spend.
The bigger picture is clear: contracts that lock businesses into rigid rules reward them for staying exactly the same. If you want to reduce energy costs and thrive, you need systems that move with you – contracts that support and encourage efficiency and financial control.
A smarter energy system
Businesses are still feeling the impact of rising energy costs. Government support has helped in places, but that’s not a long-term solution. For the economy to thrive, businesses need control, not subsidies.
Fortunately, the market is finally catching up. We're now seeing early moves towards more flexible, data-driven approaches, proving that the old contract model isn’t the only way.
Industry analysis suggests businesses could save significantly simply by changing how they buy energy, before even considering efficiency measures. Those savings could be reinvested into staff, growth, innovation, or sustainability initiatives. In other words, smarter energy choices fuel smarter business decisions.
When approached strategically, energy becomes a tool – a way to unlock lower costs, agility and growth. The companies that embrace this mindset will not just survive the market, they’ll thrive in it.
Getting over the fear of fluctuations
Energy prices move. The question isn’t whether the market will fluctuate – it’s how your business reacts when it does.
We know volatility can feel scary. But over time, markets tend to smooth out, just like investing. During the 2022 energy crisis, prices shot up dramatically – yet the annual average ended only slightly higher than previous years. Businesses that locked in at the peak ended up paying far more than those who managed their exposure dynamically.
We need to stop chasing certainty and start planning for reality. Energy will move, and your business should be ready to move with it. But this mindset only works if the systems you rely on are built for flexibility. Without the right tools, even the smartest strategy can be undermined by outdated contracts and hidden penalties.
Reimagining the system
The future belongs to businesses that can reduce spend while acting strategically. By paying only for the energy you use – not for risk premiums, supplier hedging, or hidden fees – and moving quickly to adapt, you can cut costs, improve margins and thrive amid market uncertainty.
