Is now the time to lock in an energy contract?

With energy prices set to increase again in October 2022, at the time of writing, it’s still a few months away. So, it’s natural that an energy contract renewal isn’t on your mind right now.

But with economic uncertainty set to continue for the foreseeable future, should it be?

Upcoming price drivers and energy price risks

Due to the war in Ukraine, sanctions against Russian gas via the Nord Stream 1 Pipeline have dramatically decreased demand. And while the UK and Norway have stepped up gas production, and many countries have a good stockpile of gas as we enter the warmer months in Europe, there is still uncertainty in the energy markets (even though they’ve stabilised a little recently).

But what about the colder months ahead?

While Germany and The Netherlands have upped production of thermal coal generation to reduce the demand for gas going into the winter, this will increase carbon emissions – which is an extremely touchy subject right now.

Not only that, but with scarcity concerns and already high energy prices, the proposition of rationing could inflate prices further.

So, do you stick or twist when it comes to your energy contract?

Things to consider when renewing your energy contract

Before considering locking yourself into an energy contract, take a look at the chart below:

What does the above mean?

Well, the main things to look at are the Winter-22 and Summer-23 lines. The Winter-22 line (green) was at an eye-popping 373p per therm by the end of June 2022, which equates to 13p per kWh – and that’s before you factor in transport and metering costs.

So, when is the right time to change contracts?

The answer is: there is no correct answer.

Right now, the most important thing is planning and keeping tabs on what’s happening in the markets that affect your business or industry.

There will be contracts available with options of fixed prices and flexible contracts.

Should you opt for a flexible contract, this will need a little more thought and planning.

Why?

Because it involves moving away from a traditional ‘one-time-purchase’ contract and puts you on one where you can take advantage of possible price reductions. However, this isn’t guaranteed and is a higher risk than a traditional energy contract.

Whichever you choose, it’s advisable to have an energy strategy in place to help you make the right decision at the right time.

And that’s where we can help.

Helping you choose the right energy contract

Energy prices are crazy right now, and knowing when or if to lock into a new energy contract is pretty confusing.

At Inteb, our energy purchasing team can help you create a strong energy strategy and discuss your best energy contract options before you lock in and commit.

Ready to lock into a new energy contract?

Let’s get the conversation started – call us now on 0151 601 3476