The 2026 wholesale picture
Any procurement decision starts with the curve. As at the end of April 2026:
- Day-ahead UK baseload power sits in the high-£70s to low-£80s per MWh, having softened from a winter peak above £100/MWh.
- Summer 2026 NBP gas is trading roughly 10% below the equivalent contract a year earlier, with the winter 2026/27 contract carrying a typical seasonal premium.
- Forward power through 2027 and 2028 implies a gentle downward trajectory as new offshore wind capacity, additional interconnection and battery storage displace gas at the margin.
- Forward gas is anchored by European TTF, which is itself driven by Asian LNG demand, weather and the residual geopolitical risk premium from the Middle East.
For a typical SME tendering in May 2026, this translates into business electricity fixed quotes around 22–28p/kWh and business gas fixed quotes around 7.5–9p/kWh, depending on profile, region and contract length. The cheapest 5% of fixed-power quotes for non-half-hourly customers land in the 18–22p/kWh range; the cheapest gas quotes land in the 5.9–7p/kWh range. These ranges include all pass-through elements bundled into the unit rate where the contract is fully delivered.
That market context matters for the central question of this post: in a curve that is gently downward through the medium term, is it better to fix for 24–36 months and bank certainty, or to leave volume open and ride the curve down through structured flex tranches? The honest answer is "it depends on three things" — usage size, internal capacity to manage risk, and where you sit in the budgeting cycle.
What "fixed" really means in 2026
A fixed-price contract locks the unit rate (or rates, for time-of-use products) and standing charge for the entire contract term. The supplier carries the wholesale risk and bakes it into the price. The customer carries no wholesale risk during the term but loses any benefit from a fall in wholesale.
Two important sub-types in 2026:
- Fully fixed (delivered) contract. One unit rate, one standing charge, all commodity and non-commodity costs (network charges, levies, capacity market) baked in. The customer's only variability is volume. This is the dominant SME product.
- Fixed commodity, pass-through non-commodity. The kWh rate for electricity covers commodity only; DUoS, TNUoS, BSUoS, capacity market and policy costs flow through at actuals. Common above ~£250k annual spend. Lower headline kWh rate but exposes the customer to non-commodity drift.
Two structural points to bear in mind for any fixed product in 2026:
- The cheapest fix is rarely the cheapest at renewal. Suppliers price aggressively to win, less aggressively to retain. Plan for a tender at renewal regardless of who you sign with this round.
- Volume tolerance clauses can bite. Most fixed contracts allow ±10% to ±20% variation from estimated annual quantity (AQ) without penalty. Beyond that, the supplier can re-price or apply a take-or-pay charge. If your usage is changing — expansion, closure, EV charging rollout — flag it explicitly during tender.
What "flexible" really means in 2026
Flexible procurement (sometimes called "flex" or "structured purchasing") splits your contract volume into tranches and buys each tranche at a separate price, usually at separate times during the term. The customer carries some wholesale risk but retains the ability to time purchases.
The main flex sub-types you will encounter:
- Single-supplier flex contract. One supplier, multi-tranche purchase against a published curve, daily or weekly fixings. Suits customers ~£500k+ annual spend who want control without changing supplier. Typical tranche sizes: 10%, 25% and 50% of forward volume.
- Open / risk-managed contract. Volume is left fully or partly open, with the supplier or a consultant managing fixings to a written risk-management policy. Suits portfolios above ~£1m annual spend.
- Pure pass-through with hedging. Customer takes balancing-period exposure with a hedging programme overlaid by a third-party trading desk. Generally reserved for >5 GWh / year users with treasury sophistication.
Flex unlocks two things: the ability to buy when wholesale dips, and the ability to spread risk across multiple price points so a single bad day doesn't dominate your unit cost. It introduces three demands: a written risk-management policy, internal or external resource to monitor the curve, and an appetite for budget variance through the contract term.
Basket and hybrid structures
Two structures that increasingly suit mid-market customers in 2026:
Basket procurement aggregates multiple organisations' demand into a shared flex contract. Each member typically takes their pro-rata share of fixings, with a basket manager (consultancy or supplier) running the fixing schedule. Baskets give smaller users access to flex pricing and trading discipline they could not justify standalone. Watch for: how the basket's Letter of Authority structure works, exit terms, and the manager's commission disclosure.
Hybrid contracts combine a fixed base load with a flexible top-slice. Typical structure: 60–80% of forecast volume fixed at signature, with 20–40% bought in tranches over the term. Hybrid contracts give predictability for budgeting (the fixed slice anchors the unit cost) while preserving some upside if wholesale falls. Suits customers around £250k–£1m annual spend who want to graduate from pure fixed without committing to full flex.
A decision framework by annual consumption
| Annual consumption (electricity) | Annual spend (indicative) | Recommended structure | Typical contract length | Notes |
|---|---|---|---|---|
| < 100,000 kWh | < £25k | Fully fixed (delivered) | 24–36 months | Simplicity wins. Tender at least three suppliers. Avoid auto-rollover. |
| 100,000 – 500,000 kWh | £25k – £125k | Fully fixed (delivered) | 24–36 months | Multi-site? Aggregate the tender. Ask for half-hourly profile data even if non-HH. |
| 500,000 – 1,000,000 kWh | £125k – £250k | Fully fixed or hybrid | 24 months fixed; 36 months hybrid | If your consumption profile is stable and you're risk-averse, stay fixed. If you have a treasury function, explore hybrid. |
| 1 GWh – 5 GWh | £250k – £1.25m | Hybrid or pass-through fixed commodity | 24–36 months | Above 1 GWh you're half-hourly. DCP 161 and capacity market exposure becomes material. |
| 5 GWh – 20 GWh | £1.25m – £5m | Single-supplier flex or basket | 24–36 months term, multi-tranche | Risk-management policy required. Quarterly reviews. |
| > 20 GWh | > £5m | Risk-managed flex / direct trading | 36–60 months portfolio approach | PPA, TRIAD-management or DSR overlays may be appropriate. |
Two qualifications. First, gas thresholds run roughly 10× higher in kWh terms because gas usage shapes are flatter and the wholesale market is less volatile day-to-day. Second, the framework assumes a "normal" risk appetite. If your business has covenants tied to budget variance or is going through an M&A process, push toward fixed even at the larger sizes.
Timing: when to be in the market
For business energy in 2026 the working rule is to be looking at renewal no less than 12 months ahead of contract expiry, and ideally 18 months. Two reasons:
- Suppliers price further out. An open quote 12 months ahead of go-live captures the entire forward winter as well as the contract term itself. A quote 30 days before go-live captures only the term — and may be priced defensively because the supplier knows you have no time to walk.
- Your tender process needs runway. A clean tender for a single-site SME takes 3–4 weeks. For multi-site portfolios above £250k annual spend, allow 8–12 weeks from LOA issue to contract execution.
Avoid the trap of tendering only when wholesale is falling. The cheapest moment to fix is rarely visible in real time — it is identified retrospectively. The right discipline is to tender on schedule, take the best price within your tender window, and avoid trying to second-guess the bottom of the curve.
Common procurement mistakes in 2026
- Auto-rollover. Allowing a contract to roll over onto a deemed or out-of-contract rate is the single most expensive procurement decision an SME makes. Out-of-contract rates frequently sit 30–60% above an open-market fix. See our glossary on rollover contracts and deemed contracts.
- Ignoring the standing charge. For low-load sites — a small workshop, a holiday-let, an out-of-hours office — the standing charge can dominate the bill. A 5p/day difference is £18.25/year per site; across 30 sites that's £547/year ignored.
- Not asking for half-hourly profile data even when on a non-HH meter. Most suppliers will provide an indicative profile when quoting, and the difference between a flat profile and a peaky profile drives the unit rate by 1–3p/kWh.
- Signing without a cooling-off check. Microbusinesses have specific protections under SLC 7 — including a 14-day cooling-off period for verbal contracts. Larger businesses do not, but most suppliers will accept a request to re-issue a contract within 48 hours of signing if a material error is identified.
- Failing to verify MPAN and MPRN details on multi-site portfolios. A single transposed MPAN at tender stage means a site is left on out-of-contract rates after go-live.
Disclosure and the TPI Code
If you are using a third-party intermediary (TPI) — consultant, advisor, "energy buying group" — three disclosures should be on the table before you sign anything:
- The commission structure. Per-kWh uplift, flat fee, retainer, or some combination. Numbers, not adjectives.
- The number of suppliers in the comparison. Whole-of-market means whole-of-market. A panel of three is not whole-of-market.
- The TPI's regulatory posture. The voluntary Ofgem-aligned TPI Code of Practice is publicly searchable; sign-up is the minimum bar. Government has confirmed that statutory TPI regulation will follow, with broker registration opening in 2027 and full enforcement from 2028. Don't sign with a TPI that isn't ready for that regime.
We are an independent UK utility consultancy, whole-of-market, and align our practice with Ofgem TPI Code of Practice principles on commission disclosure and Letter of Authority handling. See our glossary on the TPI Code and Standards of Conduct.
How we run a tender
For a sub-£250k SME we run a 12-supplier tender across:
- Day 1–3: LOA issuance, half-hourly or non-HH consumption pull, multi-site MPAN/MPRN verification.
- Day 4–10: Tender packs out to suppliers, returns logged in a single comparison sheet with itemised commission, exit fees and termination terms.
- Day 11–15: Shortlist three suppliers, second-round pricing, contract terms reviewed against the customer's standard procurement policy.
- Day 16–20: Contract execution, supplier confirmation, registration with the new supplier, customer file closed with full audit trail.
Above £250k we add risk-management policy drafting, a kick-off meeting and quarterly post-execution reviews. Average reduction across the 12,400+ customers we have served sits at 34%, weighted by annual spend.
Action steps
- Confirm your contract end date and any termination notice clauses today. Most non-microbusiness contracts require 30–90 days written termination notice — miss it and you roll over.
- Pull 12 months of half-hourly or monthly consumption data per meter.
- Decide your risk appetite using the table above. Write it down — even informally — before you take any quotes.
- Tender at least three suppliers, or run a whole-of-market tender via an independent consultant. Compare like-for-like (delivered, fully fixed) before considering pass-through or flex.
- Verify commission disclosure in writing before signing.
- If you'd like us to handle this for you, send us your most recent bill via the free 48-hour audit page and we'll come back with a tendered comparison.