When is the best time to renew energy contracts?

UK energy prices can fluctuate due to a variety of factors, including geopolitical events, regulatory changes, renewable energy output variability, and market demand fluctuations. Because of this, it’s important to make strategic decisions around energy contracts for your business to avoid unnecessary costs. 

At World Fuel, we specialise in helping you optimise your contract renewals for electricity, gas, and water supplies, ensuring the best rates. Here’s what you need to know when it comes to renewing energy contracts and navigating market fluctuations for maximum savings.

The renewal process 

It’s advisable to start the renewal process at least 12 months before your current energy contract ends. Renewing early offers several advantages:

• Avoiding panic decisions: With more time to evaluate options, you can avoid rushing into decisions.
• Time to compare suppliers: Early renewal allows you to compare multiple offers and negotiate for better terms.
• Negotiating leverage: When time is on your side, you have more control in negotiating rates and contract terms.

Delaying the renewal process can leave your business exposed to several risks:

• Switching to standard variable tariffs: If a contract lapses, you may be moved onto expensive variable tariffs.
• Price hikes: Market conditions can change rapidly, and waiting too long could mean missing out on better rates.
• Unplanned administrative delays: Handling renewals at the last minute can cause unnecessary delays, potentially affecting your supply or billing.

Understanding energy market fluctuations

Energy prices can fluctuate, driven by supply and demand, regulatory changes, and external factors. Supply chain disruptions, seasonal demand change, political instability, or natural disasters can all impact energy prices.

The crux of it is that, as demand for energy rises, so do prices. Conversely, when demand drops, prices tend to follow suit, offering opportunities to secure better rates. Accepting that these fluctuations are an inevitable part of the market will give you the upper hand when navigating around a contract renewal and finding the best time to renew.

When the energy market is volatile, businesses must weigh the benefits of locking in long-term rates for budget stability versus the flexibility of short-term contracts. Year-round assessment is the key to besting this fluctuation.

Do’s and don’ts when renewing your energy contract

What to do: 

• Start early: Begin the renewal process 12 months before your contract ends to give yourself ample time to research, compare suppliers, and lock in the most competitive rates. Starting early also helps you avoid the pressure of last-minute decisions, which can result in higher prices.
• Research suppliers: It’s essential to compare multiple offers from various suppliers to understand current market rates, contract terms, and potential hidden costs. However, navigating the complexities of energy contracts can be time-consuming and overwhelming.
• Consider future energy needs: When selecting contract lengths—whether it’s 1-year, 3-year, or 5-year options—think about your future energy consumption and budgeting requirements. While longer-term contracts might carry slightly higher rates, they can offer price certainty, making it easier to manage cash flow and forecasts over a longer period.
• Consult experts: Many UK businesses, especially those without dedicated in-house energy management teams, rely on Third Party Intermediaries (TPIs) such as energy brokers or energy consultants – like World Fuel – to navigate the procurement process. It’s estimated that up to 75% of UK businesses purchase energy through TPIs. These intermediaries have in-depth market knowledge and can compare contracts from multiple suppliers on your behalf, ensuring that you get the best deal tailored to your needs.

TPIs can offer several advantages including access to up-to-date market trends and forecasts and relationships with suppliers, allowing them to secure better rates or terms that would be difficult to achieve independently.

Most pertinent for most businesses is the time a TPI can free up. Handling the complexities of energy procurement can take valuable time away from your core business. TPIs take this burden off your shoulders, allowing you to focus on your operations while they manage the intricacies.

What not to do: 

• Don’t wait until the last minute: Allowing your contract to roll over automatically can lead to higher costs.
• Don’t rely solely on auto-renewals: These contracts may not offer the most competitive rates available in the market.

How World Fuel brokers can help businesses renew at the best time

At World Fuel, our energy market experts continuously monitor price trends, regulatory changes, and external factors that influence energy costs. This enables us to provide clients with real-time insights and recommendations on the best time to renew.

We help businesses understand market movements and determine which suppliers offer the best products for their specific needs. By working with us, we’ll keep you informed of market developments, to ensure you’re securing the best product at the most competitive rates.

Transition and support

World Fuel offers full support throughout the energy renewal process, making it easy for your business to switch suppliers or renew contracts without disruptions.

In addition to the procurement offering, we will manage the transition between suppliers or the continuation with your current provider as efficiently as possible to help ensure a smooth transition for you. We will also assess your capacity requirements, where applicable, to ensure you’re only paying for what you need, as well as offering you query management and site losses/additions – all included in our core brokerage offering.

Every business has different energy needs. At World Fuel, we craft bespoke renewal strategies based on various factors such as business size, location, energy consumption, and sustainability requirements. Our goal is to ensure your energy contract aligns with your operational needs while securing competitive rates.

To learn more about how we can help your business renew its energy contract at the right time, get in touch with our team of experts.