What is a multi-purchase energy contract? And why they can be powerful

In the ever-evolving landscape of business energy solutions, companies are constantly seeking innovative ways to manage costs and mitigate risks.

One such solution gaining prominence is the multi-purchase energy contract.

We will explore the intricacies of multi-purchase solutions, examining when it becomes the optimal choice for businesses, its numerous benefits, and the key considerations that come into play.

In the not-so-distant past, businesses faced a binary choice when it came to energy contracts: do you want a fixed or flexible business energy contract?

Each option has merits and drawbacks, leaving businesses in a perpetual struggle to find a solution that perfectly aligns with their unique needs.

Multi-purchase aims to offer a hybrid blend of both fixed and flexible options. Let us explain.

What is a multi-purchase energy contract?

A multi-purchase contract is a fixed-term energy agreement designed for both electricity and gas.

What sets it apart is its unique feature that allows businesses to split their contract into multiple "tranches". Basically, you divide your contract into smaller blocks (monthly, quarterly etc) and purchase energy at optimal times.

The theory is that businesses are not locked into one fixed price but can pull the trigger when they think it's an optimal time - and price - to buy energy for the next period of their deal.

It essentially captures the stability of a fixed contract with the flexibility of a flexible contract.

When is a multi-purchase contract the right option?

If your business is looking for any of the following features in your energy bill, multi-purchase contracts could be suitable:

• Risk mitigation: Multi-purchase contracts can protect against future market volatility. With multiple opportunities to lock in energy prices for future periods, they can give certainty of prices without locking the whole contract term into one price.

For example: You could buy half of your required volume one year in advance and wait for the appropriate time to lock in the remaining balance. The idea is to reduce the impact of any price spikes and give a number of opportunities to secure lower unit rates.

• Market insight utilisation: A multi-purchase is for businesses keen to capitalise on market insights and timing. You can use your understanding of market trends to fix prices when they are favourable, potentially resulting in significant cost savings.

• Customised purchasing strategy: One of the primary benefits of this product is the flexibility it offers. You have freedom to decide how to split your contract and when to fix blocks of energy, tailoring the agreement to suit your business’s specific needs and goals.

Benefits of a multi-purchase contract - and considerations to make

Two major benefits of a multi-purchase contract are:

• Cost savings: The ability to capitalise on market downturns allows businesses to secure lower energy prices, translating into significant cost savings over the contract term.

• Flexibility and control: You decide when to make your purchases, giving you unparalleled control over your energy procurement strategy.

Considerations before opting for a multi-purchase contract:

• Market analysis: Before entering into a multi-purchase contract, businesses should conduct a thorough analysis of market trends and forecasts. This approach requires expertise, understanding and active input.

• Contract term alignment: Aligning the contract term with your business goals is crucial. Consider factors such as long-term energy consumption forecasts and market projections to determine the most suitable contract duration.

• Volume flexibility: Assess your organisation’s energy consumption patterns and choose the volume flexibility that suits your needs. This ensures that your contract remains adaptable to changes in demand.

Maximise energy savings with multi-purchase energy contracts

We sat down with NPower's George Etherington to discuss the intricacies of their multi-purchase product and shares valuable insights on how they could benefit your business.

Watch the video podcast now to help you make an informed decision about your business energy strategy:

Multi-purchase contracts can be a powerful tool for businesses seeking a balance between risk mitigation and capitalising on market opportunities.

With their flexible structure, strategic purchasing options, and numerous benefits, this product can help transform the way companies approach energy procurement.

How we can help

If multi-purchase contracts sound good but there's still a lot you haven't got your head around, we get it.

We can support you.

Troo exists to help businesses like yours make sense of their energy needs, simplify complex information and make smart decisions that lead to real change and reduced costs.

We are not here to sell you a quick fix. We're here to understand what matters to you, offer clear advice, and take ownership of the hard parts, so energy becomes one less thing to worry about.

Book a free energy health check today for practical guidance on your business electricity, gas or water bills.