Spot Price vs Fixed Tariff: Which Electricity Contract Is Right for You?

Choosing between a spot price (variable) contract and a fixed tariff is one of the most important decisions for your electricity bill. There's no universal "best" answer — it depends on your lifestyle, consumption patterns, and tolerance for price fluctuations. Let's break down the differences.

Quick Comparison

Feature	Spot Price	Fixed Tariff
Price structure	Changes every hour/15 min	Same price for contract period
Bill predictability	Low — varies monthly	High — stable bills
Savings potential	High — with active management	Limited — price is locked
Risk of price spikes	Yes — exposed to market	No — protected
Effort required	Some — timing matters	None — set and forget
Long-term average cost	Usually lower	Usually higher (risk premium)
Contract flexibility	Often month-to-month	Typically 1-3 year lock-in

How Spot Price Contracts Work

With a spot price contract, you pay the current market price for electricity — the same price that's determined on Nord Pool's day-ahead auction. This price changes every hour (or every 15 minutes since October 2025).

Your supplier adds a small margin (typically 0.2–1.0 ¢/kWh) and possibly a monthly fee. Your monthly bill varies based on both how much you consumed and when you consumed it.

Pros of Spot Price

• Lower average cost — Historically, spot prices average lower than fixed rates because you're not paying a risk premium
• Benefit from cheap periods — Nights, weekends, and windy days can be very cheap or even negative
• No lock-in — Most spot contracts are month-to-month, so you can switch anytime
• Transparency — You pay the actual market price, nothing hidden

Cons of Spot Price

• Price volatility — Bills can swing significantly month to month
• Spike exposure — During extreme events (cold snaps, supply shortages), prices can multiply
• Requires engagement — To maximize savings, you need to pay attention to prices
• Budgeting difficulty — Hard to predict exact monthly costs

How Fixed Tariff Contracts Work

With a fixed tariff, your per-kWh rate is locked in for the contract duration (usually 1–3 years). No matter what happens in the market, you pay the same price.

Your bill still varies based on consumption (use more, pay more), but the per-unit cost is predictable.

Pros of Fixed Tariff

• Budget certainty — Know your cost per kWh for years ahead
• Crisis protection — Immune to price spikes during market stress
• Zero effort — No need to track prices or time consumption
• Peace of mind — Some people value stability over savings

Cons of Fixed Tariff

• Risk premium — Suppliers add a margin for taking on price risk, making fixed rates typically 10-30% higher than average spot
• Miss cheap periods — You pay the same whether prices are negative or sky-high
• Lock-in penalties — Breaking the contract early often incurs fees
• Timing risk — If you lock in during high prices, you might overpay for years

Who Should Choose What?

The Middle Ground: Hybrid Contracts

Many suppliers now offer hybrid options that combine elements of both:

Spot with Price Cap

You pay spot prices, but there's a ceiling (e.g., "never more than 30 ¢/kWh"). You benefit from cheap periods but are protected from extreme spikes. The cap comes at a cost — either a higher margin or monthly fee.

Fixed with Market Bonus

A fixed base rate, but you get a discount during very cheap market hours. Less common, but offers some upside while maintaining predictability.

Time-of-Use Fixed

Different fixed rates for different times (e.g., cheaper at night). Provides predictability while still incentivizing off-peak usage.

Making the Decision

A Note on Historical Performance

Over the long term (5+ years), spot price contracts have typically cost less than fixed tariffs in the Nordic-Baltic region. However, this includes some years of pain:

• 2022 saw unprecedented price spikes — spot customers paid 3-5x normal rates during peak months
• But 2020 and 2023-2024 had extended periods of very low prices, benefiting spot customers significantly