Electricity - Glossary
Margin (electricity contract)
The premium added by the supplier on top of the spot price in a spot-priced contract, typically 0.25-0.99 cents/kWh.
The margin is the premium charged by the supplier in spot-priced contracts. It is added on top of Nord Pool's spot price and stays constant hour by hour - only the spot price varies. The margin covers the supplier's operating costs, risks and profit.
There are significant differences between margins: at the low end the margin is around 0.25 cents/kWh, at the high end 0.99 cents/kWh. With an annual consumption of 10,000 kWh, a 0.5 cent/kWh difference in margin translates to about 50 euros per year. Alongside the margin you should consider the monthly fee - a low margin with a high monthly fee can together be more expensive than a slightly higher margin with no monthly fee.
Supplier margins vary considerably and shopping around can find a clearly cheaper option. Sopimusvahti's price comparison lists all suppliers' margins and monthly fees side by side.
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Related concepts
Spot-priced electricity
An electricity contract where the price varies by the hour according to the spot price on the Nord Pool power exchange.
Spot price
The market price of electricity, set hourly on the Nord Pool power exchange based on supply and demand.
Comparing electricity contracts
The process of comparing different suppliers' offers to find the most affordable electricity contract.
Frequently asked questions
What is a good margin for spot-priced electricity?
A good margin is below 0.45 cents/kWh. Very competitive margins are 0.25-0.35 cents/kWh. Also keep an eye on the monthly fee - the total price is what matters.
Does the margin change during the contract?
No. The margin is a fixed part of the contract and stays the same for its entire duration. The spot price varies, the margin does not.
Which matters more: the margin or the monthly fee?
It depends on consumption. For low-usage homes (under 3,000 kWh/year) the monthly fee often matters more. For high-usage homes (over 10,000 kWh/year) the margin is decisive.