How long should an electricity contract be?

Satunnainen

The duration of the electricity contract is an important decision that affects both your financial situation and the management of energy consumption. In this article, we discuss the durations of different electricity contracts and their pros and cons so that you can make the best possible decision based on your needs.

Short-term electricity contract

Short-term electricity contracts, such as one-month or three-month contracts, offer flexibility and the ability to react quickly to changes in market prices. This can be useful if the price of electricity drops significantly.

  • Advantages: Possibility to take advantage of falling market prices, flexibility in changing the contract.
  • Disadvantages: Price increases can surprise you, and renewing the contract can be tedious.

Year-long electricity contract

A year-long electricity contract is a common choice that offers a balance between flexibility and price stability. This contract period is long enough for you to take advantage of possible price drops, but not too long that you are not stuck with high prices for a long time.

  • Advantages: Reasonable price stability, possibility to take advantage of changes in market prices during the year.
  • Disadvantages: Price increases may affect the duration of the contract, but not as significantly as in shorter contracts.

Multi-year electricity contract

Multi-year electricity contracts, such as two- or three-year contracts, offer long-term price stability. This can be a good choice if you want to protect yourself from rising prices and value predictability in your finances.

  • Advantages: Long-term price stability, no need to constantly renew the contract.
  • Disadvantages: You cannot benefit from possible drops in market prices, and canceling the contract can be expensive.

Summary

Choosing the duration of the electricity contract depends on your personal preferences and financial situation. If you value flexibility and the opportunity to take advantage of changes in market prices, a short-term contract may be suitable for you. On the other hand, if you want long-term price stability and predictability, a multi-year contract may be a better choice.

You can find more information about electricity contracts and their comparison, for example, on Energiavirasto’s website and Säkkönhinta.fi.

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