Which type of energy contract is right for your self-catering business?

Introduction

Running a self-catering property in Scotland means juggling a lot: guest bookings, upkeep, cleaning, and everything in between. Energy might not be the first thing you think about, but the type of contract you’re on can make a real difference to your running costs.

Fixed. Variable. Pass-through. No standing charge. Blend and extend. On paper, they all sound reasonable. In practice, it’s hard to know what any of them actually mean for your business.

You might be offered several options by a supplier, broker or consultant. But if no one explains them properly, how are you supposed to compare? It’s easy to end up defaulting to what feels familiar, or what looks cheapest at first glance, without fully understanding the trade-offs.

Here’s a quick guide to the main types of contracts, and what they might mean for your self-catering business.

Fixed-rate contracts

A fixed-rate contract means your price per unit, and usually your standing charge, is locked in for the duration of the agreement. That might be one, two or even three years.

The benefit: You know what you’re paying, which makes budgeting simple. It protects you from sudden price spikes and takes the guesswork out of forecasting.

But: If market prices fall during your contract, you won’t benefit, you’ll still pay the rate you agreed upfront.

• Good for: Predictable costs, peace of mind
• Be aware: You might miss out on savings if the market drops

Flexible energy contracts

A flexible energy contract moves with the market. If wholesale prices fall, your bills come down. But if they rise, so do your costs.

It’s a higher-risk, higher-reward setup. You’re exposed to volatility, but you might save money during quieter periods.

• Good for: Flexibility and short-term opportunities

• Be aware: Budgeting gets tricky, and prices can jump unexpectedly

Pass-through contracts

In a pass-through contract, you agree a rate for the energy itself, but other charges (like transmission, distribution and policy costs) are passed on at cost.

It’s a more transparent structure, often used by larger or multi-site businesses that want a clear breakdown of every charge.

But while your energy rate stays the same, your total bill might not. That’s because third-party costs can change throughout the year.

• Good for: Larger or multi-property operators who want more visibility
• Be aware: Monthly costs may still vary, and admin can be heavier

No standing charge contracts

This type of contract removes the daily fixed fee you’d normally pay, but offsets that with a higher unit rate.

It only really makes sense for businesses with very low or seasonal usage. For many self-catering owners, this could apply if your property sits empty for long stretches in winter, but it usually costs more if occupancy levels rise.

• Good for: Low usage or seasonal properties (e.g. holiday lets)
• Be aware: If your usage picks up, this will likely cost you more

Renewable contracts

Renewable or green energy contracts guarantee your supply is backed by certified green generation (usually wind, solar or hydro).

This isn’t just about doing the right thing. More and more guests expect businesses to show commitment to sustainability. For self-caterers, a renewable contract can be a visible way to appeal to eco-conscious travellers.

• Good for: Properties with sustainability goals or guest demand for greener stays
• Be aware: Slightly higher rates, depending on supplier

Blend and extend

This is an option some suppliers offer mid-contract. You blend your current rate with a new (usually cheaper) one, in exchange for extending the contract length.

It can be a smart way to reduce costs without fully re-contracting, but only if the timing is right.

• Good for: Owners in long-term fixed contracts looking for relief
• Be aware: You’re locking in again, so think ahead before signing

So, which one is right for you?

That depends on three things:

• How much control you want over your costs
• How much time and energy you can give to managing it
• What matters most: predictability, savings, sustainability or simplicity

Some self-caterers choose a fixed contract simply for peace of mind. Others prefer a variable setup to chase savings, especially if they’ve got someone to monitor it closely. For many, sustainability is now a deciding factor; guests are asking the question, and contracts can help support that commitment.

There’s no single right answer. But there is a right fit for your property, based on how you operate, what you use, and what you care about.

Next steps

If you’re unsure whether your current contract is working for your self-catering business, it’s worth checking. Understanding your options means you can make clearer choices about cost, sustainability, and how your property is run.

At Troo, we help you make sense of the energy market. We explain your options clearly and calmly, based on how your business actually operates.

Author of guidance: Troo

Date of guidance: October 2025

Version Number: V1

Disclaimer – Guidance Sheets are written by experienced Members of the ASSC and other experts. The information in the ‘Guidance Sheet’ is provided by the ASSC for use by Members in support of their own independent business decisions. It does not constitute advice or instruction for which the ASSC can be held liable in any way whatsoever. All Members and other readers remain responsible for the consequences of any decisions taken whether in the light of information gained from this Guidance Sheet or not.