What is a dynamic energy contract?

On a fixed contract the price per kWh is set for a period. On a variable contract the supplier can adjust the price periodically. On a dynamic contract the price follows the energy market: for electricity it differs per hour or per quarter of an hour.

Prices are often lower at moments with plenty of supply, in the middle of a sunny day for example, and higher when demand is high. Sometimes the wholesale price is even negative. That does not automatically mean your total consumer price is negative: suppliers can charge mark-ups or fixed costs, and taxes still apply. You need a smart meter for a dynamic or flexible rate.

A dynamic contract can bring an advantage if you are able to shift part of your consumption. You can do that by hand, but also automatically: a smartly controlled home battery can charge when electricity is cheap and discharge when it is expensive. The eventual result depends on price differences, efficiency, any costs, and how the system is controlled.

If you have solar panels, do not look only at the price you pay for the electricity you take. On a dynamic contract the compensation for exported electricity can also change per hour or quarter of an hour. At sunny moments that payment can be low or even negative. So check the feed-in compensation, any feed-in costs and the rest of the contract conditions as well.

• households who can consciously plan their consumption around cheaper moments;
• households with smart appliances that can automatically shift charging, heating or other consumption;
• people who accept price swings and want to follow their consumption and rates.

A dynamic contract is not suitable for everyone. If you mainly want certainty about the supply rate per kWh and as little exposure to price peaks as possible, a fixed contract may suit you better.