Protect consumers and retain flexibility: fixed price contracts with fixed volume

While consumers in some European countries have spot price-based contracts today, it is conceivable that many will prefer fixed prices once market prices have settled at more attractive levels than in the first half of 2022. A fixed price contract of longer duration will protect against future price increases. However, the power system will increasingly need flexibility, and if most consumers are on fixed price contracts, they have no incentives to be flexible. A fixed price contract with a fixed volume, however, might offer sufficient protection against high prices, while keeping in place exposure to hourly spot prices. Case studies of hourly data from four consumers in Norway, the Netherlands and Germany indicate a limited risk exposure with such contracts, even in an extreme year like 2021. Fixed price contracts with fixed volumes appear to be an attractive option to be further developed for the future power system.