Fixed or Wholesale: How Long Should You Fix Your Business Energy?

A better question: how long should you fix for, and how much risk can your business actually carry?

Why the wholesale price isn't the whole picture

Wholesale costs make up around 40% of an electricity bill and around 60% of a gas bill, and they're driven by weather, demand and global events, according to Ofgem’s March 2026 guidance on managing business energy costs. Chasing today's number won't tell you much about tomorrow. What actually matters is how you structure your contract to handle that movement, whichever way it goes next.

There's no universal right answer here. It comes down to how long you fix for and how much risk your business can carry, not the number you happen to see the day you compare.

Contract length matters more than people think

A fixed tariff locks in your unit rate and standing charge for an agreed period, usually one to five years. That length affects your risk more than the wholesale price on the day you sign.

• Shorter fixes (12 months) keep you close to the market. You'll re-price sooner, useful if you think rates might drop, but you'll be back here again sooner too.

• Mid-length fixes (2 to 3 years) are the middle ground most SMEs land on. Enough certainty to budget properly, without locking in for the long haul.

• Longer fixes (4 to 5 years) suit businesses that want to stop thinking about energy costs altogether. You trade the chance of a market dip for years of not having to worry about it.

What longer fixes don't tell you upfront

A longer fix isn't risk-free. It just trades one risk for another. Before signing anything beyond two years, it's worth checking:

Exit fees. Leaving early usually costs you. How much depends on your supplier and how much term's left, so check your own contract rather than assuming it's just small change.

Outgrowing the deal. If your business scales up fast, a rate agreed for a smaller usage profile might stop looking competitive. You'd still be tied in either way.

Moving premises. Contracts sit with the meter, not the business. If you're relocating, your tariff doesn't just come with you.

None of this makes longer fixes a bad idea. It just means the certainty comes with a trade-off worth knowing before you sign, not after.

How exposed is your business in reality?

Easy question to ask. Harder to answer at 11 pm with a renewal notice staring at you. Two things worth checking:

What share of your overheads is energy? Small slice, a shorter fix and a bit of market exposure probably won't sting. Bigger slice, closer to double digits, and a longer fix carries more weight.

Growing, shrinking, or staying put? A business planning to add sites, headcount or kit in the next couple of years is more likely to outgrow a long fix. Settled and steady has less to lose by locking one in.

What happens if you do nothing

This is the bit that catches businesses out. Contract ends, no new one arranged, and most suppliers move you onto an out-of-contract or deemed rate automatically. These rates cost more than a negotiated deal, and they kick in from the day after your contract ends, whether you've clocked it or not.

Know your end date. Start comparing three to six months out. Whatever length you land on, doing nothing is reliably the most expensive option on the table.