The volatile nature of the energy market has left many UK businesses asking the same question: “when is the best time to renew my energy contract?”
The answer is a complex one, with numerous factors influencing what the best advice is for you.
Before making any decision, it’s important to consider:
- The strength of the current market.
- The length of time remaining on your current contracts.
- Your current terms & conditions.
In the following piece, we’ll briefly cover the impact the three areas can have on your energy renewal decision and the best approach to take in each scenario.
The strength of the current market
Since 2020, the COVID pandemic, worldwide gas shortages and the Russian invasion of Ukraine have made an already volatile energy market unbearable at times. The unpredictability of future pricing left many businesses scratching their head wondering whether to stick or twist.
It’s important to act swiftly when dips in the market are identified. If you’re currently working with an energy consultant, this should be the point they’re getting in touch with you to discuss renewing your current contracts, even if you have a considerable amount of time left on your current deal (but more on that later).
Throughout the winter of 2022, many businesses opted to stay on ‘out on contract’ rates due to the extreme nature of the market. However, the fall in energy prices experienced in the Spring of 2023 has seen many firms act now and secure new deals ahead of future price increases expected during the winter months.
The length of time remaining on your current contracts
For many firms, the time remaining on their current contracts is the biggest influencer on when they decide to renew.
It’s only natural that many businesses consider the renewal process as being tied to the latter days of their contract, however, this doesn’t always need to be the case. Depending on who your current supplier is, firms can often agree new prices well in advance of their expiry date. This is referred to by some in the industry as ‘advanced procurement’. In many cases, firms have negotiated prices that would have been completely impossible by the time their current deal expires.
Here’s an example using one of customers.
In 2021, we spoke to the client regarding their current energy contracts. Although the firm still had 12 months remaining on their existing deal, our team negotiated a price for their electricity and arranged for the new contract to go live on the expiry of their current deal.
Come May 2022, following the immediate aftermath of the conflict in Ukraine, average electricity rates had increased by an eyewatering 29p p/kWh, a market our client would have been negotiating in had they waited until the expiry of their deal. By utilising advanced energy procurement, the firm were able to prevent a substantial increase in their electricity expenditure.
Your current energy renewal terms & conditions
The terms & conditions within the small print of the contract you signed with your current supplier or energy consultant will have a big impact on just how big your renewal window is.
In many scenarios (but not all, as we’ve highlighted above), your terms & conditions will allow you to start comparing energy prices and switch supplier, or renew with your current provider, six months before your current end-date.
It’s always advisable to start obtaining prices as soon as possible for several reasons, including:
- For some suppliers, their terms may include an autorenewal date that kicks in before you reach the end of your current deal.
- If the market is proving exceptionally volatile, you’ll be left with no plan B and be forced to accept a high renewal offer or take your chances on flexible out of contract/deemed rates.
Typically, you can usually switch business energy at your leisure if you’re on a contract you’ve not chosen – such as a deemed energy contract or default energy contract. This is often the case if you’ve recently taken over a premises with an existing energy contract negotiated by the previous owner.
How can GAS help with my energy renewal?
Our team of energy consultants are experts in finding the right energy deal for our customers. We approach each client in a unique way, getting to know and understand how their business operates and which energy deal is the best fit.
GAS’ experience in advanced procurement enables us to analyse your current contracts, research the market, and establish the best window for your business to renew. Our relationships with many of the UK’s leading energy suppliers enable us to negotiate effectively on your behalf, especially if you have a strained relationship with your current supplier.
To get in touch, simply give us a call on 0800 130 3514 or complete the contact form on our website and an agent will be in touch.