There are various procurement models for procuring electricity and gas. In today's article, we look at "fixed price" purchasing. We explain the most important information about this. We look at the questions: What is fixed price purchasing? What are the advantages and disadvantages? What points should you bear in mind when making fixed-price purchases for electricity and gas and what preparations need to be made? Plus: what new opportunities arise from digital platforms such as enPORTAL connect when it comes to fixed-price purchasing of electricity and gas.

We are deliberately focussing here on the most important, practical information and, where applicable, to-dos for you as an energy buyer, so that you get a first impression of the topic.

Fixed-price procurement - what is it?

A fixed-price procurement of electricity or gas refers to a contract between a consumer (a company) and an energy supplier in which the price of electricity ( = more precisely the "pure energy price") is fixed for a certain period of time. Under this contract, electricity is supplied at a previously agreed fixed price per kilowatt hour (kWh), regardless of market fluctuations or price increases during the term of the contract.

In the case of fixed-price procurement, a pure energy price (= pure exchange price for electricity and gas) is therefore generally concluded for an entire delivery year. As a rule, the purchase is made in advance, i.e. in good time before the start of delivery, e.g. you purchase your electricity or gas requirements in 2024 for 2025. In exceptional cases, shorter periods can also be agreed (e.g. every six months) or fixed prices can be agreed for several supply years. Typically, fixed-price contracts for electricity have a term of one to three years, although the exact term can vary depending on the supplier and the company's wishes. During this time, the price of electricity remains constant, regardless of changes in market prices or other external influences. It is important to note that fixed-price contracts for electricity do not usually cover the entire cost of electricity, but only the pure energy price in combination with the energy supplier's surcharge, which it additionally charges for the supply. There are also other charges such as grid utilisation fees, taxes and levies, which are calculated separately and are generally the same for all market participants. With a fixed price, only the pure energy price plus the supplier's margin is negotiated - and these can understandably vary. It is therefore always worth enquiring about the largest possible number of suppliers.

Advantages of fixed-price procurement

1. fixed-price procurement offers you planning security and protection against unexpected price fluctuations on the electricity market. It enables you as a purchaser to calculate your electricity costs over a longer period of time, as the price is fixed for the entire term of the contract. This means that you have budget certainty for the entire purchase period and can carry out reliable economic planning.

2. low administrative effort: you simply buy at a fixed time and no longer need to monitor stock market developments for the agreed period.

3. extremely high competition between the energy suppliers who want to win you as a customer.

Disadvantages of fixed-price procurement:

1. fixed-price procurement harbours a high price risk. This means that the costs are dependent on a single, arbitrary purchase date. It can therefore happen that prices fall further after the purchase, preventing you from making an even more favourable purchase. Equally, it is possible that the stock market prices will rise and you will still have made exactly the right purchase.

2. no flexibility, as it is not possible to benefit from falling market prices after the contract has been concluded.

What should I bear in mind when procuring at a fixed price? The most important points

If you're looking to source fixed prices for electricity or gas, you'll need a range of information to make informed decisions and get accurate quotes. Here is some important information you may need:

1. consumption data:

You should know your current consumption data for electricity and/or gas. Ideally, you should have the consumption figures for the last few years or months in order to determine an average annual consumption.

With enPORTAL connect, all consumption data is stored on the energy platform. You can see all consumption points as well as the costs and consumption, which are updated automatically. This means you have up-to-date energy data available at all times after logging in and only need a fraction of the time previously required for energy data management.

2. contract term:

Think about the delivery years for which you want to set the fixed price.

 

enPORTAL tip: On the enPORTAL connect energy platform, you can see the exchange prices for the currently traded delivery years at a glance so that you can quickly decide which delivery years you would like to conclude a contract for. You are also supported by our AI-supported energy price forecast, which transfers the exchange prices to your individual consumption profile so that you can also see the expected energy costs at any time.

 

3. desired start of delivery:

Specify when the new electricity or gas contract should start. This is usually the time when your old contract expires.

enPORTAL Note: With enPORTAL connect, you can view all your energy supply contracts with the respective cancellation periods on the energy platform. This means you always have an overview of your contract terms.

4. utilise competition in the energy market:

Find out about the current electricity and gas prices on the energy market by enquiring with the largest possible number of energy suppliers. These can fluctuate greatly, so it is worth making a broad enquiry about the market.

enPORTAL Note: Up to 700 energy suppliers are informed about your tender and market enquiry via the digital energy marketplace of enPORTAL connect. This allows you to take advantage of the full competition and benefit from the best energy price at the time of purchase!

5. additional delivery requests:

Consider whether you would like additional supply options such as green electricity or certain services.

enPORTAL Note: Via enPORTAL connect, you can communicate your wishes with a click and choose from a wide range of green electricity certificates.

6. terms of contract:

Read the contract terms carefully, including cancellation periods, price guarantees and any fees that may apply.

enPORTAL Note: Using enPORTAL connect eliminates this research work, as all contract terms are presented transparently and comprehensibly for you, so you don't need to worry about overlooking anything. Likewise, your personal customer advisor will support you at all times with enPORTAL connect.

7. compare offers:

Find out about current offers from various energy providers and compare them with each other.

enPORTAL Note: Our digital platform automatically compares all offers for you. After the end of the tendering process, you will see all offers sorted according to the best energy price, and you will also see other price components such as tolerance bands. This allows you to see at a glance which supplier is offering you the best energy price.

8. customer service and reputation of the provider

Consider the customer service and reputation of the energy provider. Read reviews and experiences of other customers.

enPORTAL Note: This work is no longer necessary with enPORTAL connect because you can be confident that we only work with verified and reputable suppliers, with whom we have maintained a very trusting relationship since the company was founded. This means that you can also see the personal contact details of the key account manager for each energy supplier on the digital platform and can contact them independently of us. Otherwise, your personal account manager will be at your disposal.

 

9. grid fees, taxes, levies and charges

When it comes to the final energy costs for your company, don't forget to take into account the publicly determined ancillary components of your final energy costs, such as grid utilisation fees, taxes and levies. With fixed-price purchasing, you only receive the costs for the pure labour price, which must be offset against the public values.

enPORTAL Note: Our energy platform does this work for you! You no longer need to calculate, add or supplement anything - all cost components are automatically displayed and calculated for you so that you always have an overview of all individual cost components and can keep an eye on your energy costs at all times.

 

Conclusion: Fixed-price purchasing harbours high opportunities and risks

We hope you were able to gain a first impression of the topic of fixed-price purchasing of electricity or gas. We would like to point out that we cannot provide a complete overview here - there are books to be written on this subject... - but if you have any questions or require further information, please do not hesitate to contact us at any time! We will be happy to explain to you how fixed-price procurement can work with our energy platform. You are welcome to arrange an online appointment with our employee Norman Lübeck -> Contact