In volatile markets, your energy buying strategy should be based on one thing: minimising risk. Not chasing the lowest price. Not second-guessing the market. Minimising risk. Everything else is a gamble… and it’s not your money to gamble with.
We work with over 4,500 charities. We see what happens when this goes wrong — and it’s not the decision maker who pays the price. It’s the services that get cut.
What we’re seeing
Energy markets are volatile and will remain so while global instability continues. How long is that? Read the news. Read the room. Years, possibly.
Because of this uncertainty, charities renewing their energy contracts don’t know whether to sign one-, two-, or three-year deals. That’s understandable. Nobody has a crystal ball. But what’s happening next is not understandable at all.
A handful of decision makers — particularly within the FD community — are convinced they know which direction markets will travel. Downwards. They want to sign one- or two-year contracts, betting that prices will be lower when they come to renew. When we ask what they know that we don’t, the answer is usually “a gut feel” or “markets won’t stay this high forever.”
This is not a strategy, it’s a hunch. And when markets become even more volatile, these same decision makers are inclined to go shorter still. The logic gets worse precisely when it matters most.
The home energy test
Here’s what’s revealing. These same decision makers typically fix their own home energy for as long as possible. Why? Because it’s their money and they don’t want to risk it.
At work, they throw caution to the wind. At home, they do the opposite.
That tells you everything you need to know about the quality of the thinking.
Why this is happening
FDs are trained to think in budget cycles. Year one needs to be accurate. Year two, close to accurate. Year three? Too far out, too uncertain, doesn’t really matter. That logic makes sense in stable conditions. In the current climate, it’s dangerous.
Because here’s what happens: a charity signs a one-year contract; twelve months later, prices are higher. They renew at a worse rate. We see this every single day. Charities paying more than they needed to, all because someone thought they knew best.
This isn’t a theoretical risk; it’s a pattern we watch unfold, repeatedly, across the sector.
Three questions your board should be asking
Before your organisation commits to anything shorter than a three-year fix, put these to the room:
- Do you honestly believe the world will be less volatile by 2029?
Consider what’s in front of us. The current US presidency runs until January 2029. Conflicts in the Middle East show no sign of resolution. Russia’s and Iran’s revenues are rising while instability serves their interests. European and Nordic leaders are rapidly scaling up military capabilities — ask yourself why. Former NATO Secretary General George Robertson has warned that Russia could be ready to attack NATO by the end of the decade. These aren’t fringe predictions. They’re the security environment your next energy contract will operate in.
- Will our adversaries use energy as a weapon?
This is already happening. Russia’s navy has run submarines over European energy cables and pipelines. Pipeline sabotage has proven precedent — the Nord Stream explosions in 2022 were confirmed as acts of deliberate sabotage. An attack on an Italian oil pipeline disrupted supply all the way to Germany. Energy infrastructure is a target. Assume it will remain one.
- Is anyone with power actually incentivised to bring prices down?
High prices benefit energy-producing countries, governments through increased tax revenues, and energy generators. The UK Government is reportedly benefiting by an extra £500 million per month during the crisis. Russia’s energy revenues have tripled. Proposed tolls being levied by Iran could raise an extra $14 billion per year. The people who could reduce prices are profiting from them staying high.
What to do now
First, establish your organisation’s appetite for risk. The financial impact of getting this wrong could be material. This is a board-level conversation, not a procurement decision to be delegated unchallenged.
When you have that conversation, don’t let one voice dominate. Challenge should be meaningful and documented. What you’re trying to prevent is ego or overconfidence overriding sound decision-making — the kind that could leave your organisation exposed for years.
Second, if your organisation has determined it has no appetite for risk, make sure any contracts being quoted are genuinely fully fixed. Many providers claim to offer fixed products, but only three suppliers currently offer a truly fully fixed contract:
SSE — ‘Protect’
EDF — ‘Peace of Mind’
Drax — ‘Fix for Good’
If your quote isn’t specifically for one of these three products, your contract could be unlocked and additional charges applied at various points throughout the term. Ask your broker or supplier to confirm in writing what the maximum exposure could be. You might be unpleasantly surprised.
The bottom line
In upward-trending volatile markets that could continue for several years, the most sensible decision you can make is to minimise exposure rather than chase the best price.
Fixing for as long as possible may not turn out to be the cheapest option overall. But it takes your charity’s money off the table — and that’s exactly where it should never have been.