Dynamic energy contracts can offer a real solution to farmers who like to use renewable energy sources and the fluctuating energy tariffs. Are you unsure whether this type of energy contract is right for your company?
In this article you can read more about how the contract works, the benefits and the risks.
Dynamic energy contract
Create a dynamic energy contract is a flexible contract where you do not pay a fixed monthly rate for all your gas and energy costs. Instead of the fixed costs, the tariffs depend on the changing prices of the energy market. The consumer or the company that enters into such a contract can look at the daily changes and adjust its consumption accordingly.
So it gives more control over costs and has the potential to save a lot of money. Gas prices change daily, energy prices can even be adjusted every hour. You can therefore compare the rates of your energy with an hour before, and save costs by carrying out certain processes that require a lot of power when the rates are relatively low.
Advantages of a dynamic contract
Because of the fluctuating prices, companies can save money compared to a 'normal' energy contract. During periods when there is often less demand for power, such as early in the morning or late at night, farms can benefit from lower energy rates. The energy contract is also very flexible and often has no notice period.
More and more farmers are using their own sustainable energy sources, such as solar panels and wind turbines. This makes you less dependent on energy suppliers and saves on your monthly costs. A dynamic contract is a good way to get the most out of your own energy source by using it during peak hours and paying a lower price during off-peak hours.
A dynamic contract also motivates to use energy efficiently. Energy-intensive processes can be carried out during off-peak hours, so you pay the lowest rates. This is not only beneficial for the wallet, but also for the environment.
Risks and challenges
A dynamic energy contract can help save on high energy costs, but there are also challenges. With this type of contract, you are more dependent on the volatility of the market energy market. There are financial risks due to unexpected price fluctuations. It is therefore important to monitor and analyze the energy market almost non-stop, so that you can make well-informed choices for your company.
Minimizing risk is a challenge. You can make this easier by using certain programs or software that monitor energy-intensive processes. This allows you to indicate a maximum price and these processes will therefore be checked and not carried out if the costs are too high at that time. This way you cover yourself against unexpected high costs.
Does a dynamic energy contract suit your company?
Not every company will benefit from a dynamic energy contract. It is therefore important to see whether it is a good way to save costs, or whether you still opt for the certainty of a fixed monthly rate.
Would you rather opt for a fixed energy contract with a term of one or three years? This will be possible again from 1 June 2023. A fixed business energy contract you can now take out for a longer period of time with fixed monthly rates. This is not only good news for companies, because consumers can also enter into a permanent contract again compare energy to see where they are most profitable.