How to select the right electricity contract

August 13, 2025

Selecting an electricity contract is not a decision to be taken lightly — selecting the right one can lower your energy costs and support sustainable choices. In this guide, we’ll start by explaining the most common electricity contracts and how their prices are made up. Then, we’ll move on to helping you uncover which aspects matter when selecting a contract based on your household's needs and also your goals. Let’s dive in:

1. Familiarize with common electricity contract types

Depending on where you live, electricity contracts may go by different names. For simplicity, we’ll focus on the most common contract types and use the names most widely recognized across Europe.

- Spot price / variable electricity contract: In this type of contract, the price you pay changes every hour (soon it will update every 15 minutes). That means the rate right now may be completely different in the next hour or two. The benefit is that you can see prices in advance — for example, by checking the Synergi app — and plan your high-energy activities, like laundry or EV charging, for the cheapest times of the day and save on your bills. Historical trends show spot pricing often beats fixed pricing over time!

- Fixed price electricity contract: In this type of contract, the price you are given is permanent for the contract term. Nowadays, terms can range from 6 months up to two years. This contract offers stability to risk averse households, but can be more expensive in the long term if market prices drop. Best suited for homes that do not have high energy needs and want predicability in their costs.

However, new services (F.e Synergi smart charging featuring rewards) are coming to market for homes with fixed price contracts and energy devices like EVs or heat pumps — which will pay you back to use electricity according to the spot (Nord Pool) market, contributing to the sustainability of our energy system.

- Hybrid / flexible electricity contract: This contract type offers the best of both worlds by mixing spot and fixed pricing. In hybrid contracts, what you pay is your fixed price and the consumption impact that varies based on your electricity usage.

This means that the consumption impact will either decrease or increase the price of your electricity — the more you steer you electricity usage to cheap hours according to the spot (Nord Pool) market, the lower your electricity costs will be. Best suited for homes who want to avoid sudden price spikes while allowing savings during cheaper hours.

2. Understand what affects electricity prices

In much of Europe, electricity is bought from a large marketplace called Nord Pool, which sets the wholesale price for each country. This is especially relevant for contracts with spot/variable prices.

These prices change due to many factors — weather, water reserve levels, fuel costs, global energy events, transmission bottlenecks, and even day-to-day changes in electricity use.

Take Finland as an example: during a freezing week, households turn up the heating, pushing electricity needs much higher than usual. If there isn’t enough electricity available, prices rise and the national energy company may tap into its energy reserves to meet this sudden need.

Electricity prices are also based on forecasts. With fixed or hybrid contracts, providers buy electricity from Nord Pool at a certain price, then predict how much energy their customers will use. They take the risk of offering you a set rate, hoping their forecast will allow them to make a profit.

3. Identify your electricity needs

Every home is different and consumes energy in unique ways. To understand what contract is suited to your home type, it’s important to look at what kind of home and heating you have (heating is usually the biggest energy consumption source in a home).

Houses with electric heating, like detached homes, tend to use more electricity and might benefit from spot-price contracts that allow them to shift energy use to cheaper hours. In contrast, apartment buildings with district heating have lower electricity needs and may find a fixed rate more beneficial.

It’s also worth remembering that if you want to avoid risk altogether and commit to a predictable rate for some time, then fixed price contracts are good options.

When we add high energy consuming devices like electric cars or heat pumps to the mix, the recommendation shifts. If you own these devices, a spot/variable rate contract can be more beneficial — you can charge or even heat your home according to the cheaper hours of the day, which you usually know beforehand. This has allowed Synergi app users to save up to 50% on their annual EV charging costs.

Note: Keep in mind that in some countries transmission and consumption costs are billed separately, this mean you will get two separate bills — but depending where you live your electricity provider can offer both.

4. Find the best electricity deals

Finding the best electricity deal isn’t always straightforward — it means comparing offers from multiple providers. The catch? Buying directly from a provider isn’t always the cheapest option.

That’s why many consumers turn to national or regional electricity comparison websites. These sites are often paid by electricity companies to feature their deals. They guide you through a series of questions and then suggest a contract they believe fits your needs. Behind the scenes, multiple providers are competing for your business.

One more tip: offers change frequently!!! To avoid overpaying, start checking your options a few months before your current contract ends.

5. Choose an electricity contract based on your priorities

It’s also important to select an electricity contract based on your main goals. For example, do you want to save on electricity costs, lower your carbon emissions, or both?

If you want to focus on saving on your energy bills, then going for a contract type to match your consumption habits is a good choice. For example a spot or hybrid contract are great for this! In addition, when you use energy according to energy prices, you are also lowering your emissions because those hours usually correspond to times when there’s electricity demand.

Then, you can also focus on selecting a contract where the electricity provided is coming from renewable sources like wind, solar, or hydro power.