Fixed vs. variable energy contract: a guide for businesses
Direct answer
A fixed or variable energy contract in the Netherlands differs in how the supply tariff behaves. With a fixed contract the price is set for the entire term, which gives price certainty but no benefit when the market falls. With a variable contract the price changes periodically, for example each quarter, so it moves with the energy market.
- Clear definition
- Data-driven assessment
- Risks and opportunities visible
- Practical next steps
Fixed vs. variable energy contract: scattered information versus Energy Intelligence
A business buying energy faces a basic choice: certainty or flexibility. A manufacturer with a tight annual budget often wants to know its price per kilowatt-hour regardless of the market. Another company would rather benefit when energy prices fall. The difference between a fixed and a variable energy contract turns on exactly that trade-off. In the Dutch market it determines how much you know about your costs in advance and how much room to manoeuvre you keep.
- A fixed contract has an end date and a supply tariff that does not change until then; a variable contract has no end date and a tariff that moves periodically.
- If you cancel a fixed contract early, the supplier may charge a cancellation fee; with a variable contract you pay no cancellation fee.
- The supplier announces a new variable tariff at least one month in advance, so you know what you will pay in the coming period.
Insight
Traditional approach
Information is scattered across portals, documents, invoices or separate spreadsheets.
Modern approach
Data, context and interpretation are brought together into a clear decision picture.
Decision-making
Traditional approach
Choices are made based on averages, assumptions or occasional analyses.
Modern approach
Scenarios, KPIs and current measurement data make the trade-off more concrete and repeatable.
Follow-up
Traditional approach
Actions often stay non-committal or disappear into separate reports.
Modern approach
Follow-up actions, monitoring and reporting are linked to the same energy data.
How does a fixed contract work?
With a fixed contract the supply tariff per kilowatt-hour of electricity and per cubic metre of gas is set for the entire term. That term is defined, for example one or three years, and the contract has an end date. The supplier must deliver at the agreed price throughout that period, even if the energy market becomes more expensive. So you do not pay more when prices rise, but you also do not benefit when they fall. Note that only the supply tariff is fixed. Other items on your bill, such as energy tax and grid operator charges, can still change during the term. When the period ends, the contract usually converts to a variable tariff.
- The supply tariff is fixed for the entire term, with a clear end date.
- You pay no more when the market rises, but do not benefit when it falls.
- Taxes and grid operator charges can still change within a fixed contract.
- After the term a fixed tariff usually converts automatically to a variable one.
How does a variable contract work?
With a variable contract the supply tariff changes periodically and moves with the energy market. This usually happens at fixed moments in the year, for example every three months. With some contracts it is every six months, with others every month. When and why the tariff can change must be set out clearly in the terms in advance. The price can go up or down. The supplier announces a new tariff at least one month ahead, so you can prepare for it. A variable contract has no end date, and you can cancel it without a cancellation fee, subject to the notice period in your terms.
- The tariff changes at fixed moments, often quarterly, sometimes every six months or monthly.
- A new tariff is announced at least one month in advance.
- The contract has no end date and carries no cancellation fee.
- When and why the tariff changes is stated in the terms in advance.
What does a business weigh up?
The core is budget certainty versus flexibility. A fixed contract gives peace of mind: you know what you pay per unit for the coming year or longer and can budget on it. The price for that is that you do not benefit when the market falls, and that cancelling early can cost a cancellation fee. Under the revised Dutch rules that fee depends on the loss the supplier incurs because of your early exit. A variable contract gives room to move: no end date, no cancellation fee and movement with the market, but less certainty about future costs. Also weigh the term and the cancellation conditions, and compare not only the bare tariff but also the fixed supply costs per supplier.
- Fixed contract: budget certainty, but no benefit when the market falls.
- Variable contract: flexibility and no cancellation fee, but less cost certainty.
- A cancellation fee on a fixed contract depends on the supplier's loss.
- Compare the term, cancellation conditions and fixed supply costs, not just the tariff.
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