Worst of times
The past 12 months in particular have brought massive challenges for households and for the government, the regulator, the networks, generators and suppliers alike. I’ve seen no end of tweets, LinkedIn stirrings, news articles and political declarations about everything from the Beast from the East, to Brexit, the price cap, rising energy bills, the capacity market suspension, the ending of the feed-in tariff and, of course, small (and “medium-sized”) suppliers going out of business. For the uninformed, the UK energy sector can make for some pretty grim reading. For the cynics, there is seemingly endless fodder.
The reality, however, is that this is a complex market where the objectives of the country, the planet, the markets, people and businesses haven’t historically aligned well. We shouldn’t be surprised when there are failures because, while highly regrettable, in some respects they are inevitable in a changing and competitive market. That doesn’t mean “the industry is in crisis” as one commentator recently told me. Quite the opposite. It’s the result of a compounding of circumstances and tensions, not helped by segments of the media who love to tear into suppliers’ “hiking” costs, while ridiculing those who are “priced unsustainably”. That’s also inevitable to an extent.
However, among all that, we are seeing new, genuinely customer-centric propositions emerging, backed up by new business models that are changing the relationship between energy suppliers and consumers, and – more importantly – delivering for the environment.
Best of times
The dramatically increased demand for renewable energy, electric vehicles and a genuine service offering, represents a clear shift in buying behaviours. While not soon enough in my opinion, environmental impact is rightly beginning to become a key buying criteria as people have been gradually prompted to look at the small changes they can make to reduce their environmental impact. When that change can be made for a similar or lower price it becomes the default, and that’s where it should be.
Encouragingly, it’s not just the start-ups within the market making the changes. They may prove the propositions and models in many instances, but increasingly the established players are bringing them into armouries to drive change within. Last year BP acquired EV charge point company Chargemaster, having invested heavily in solar developer Lightsource the year before. Last month Shell acquired Germany battery storage manufacturer Sonnen, followed quickly by Limejump, building on purchases of First Utility and New Motion previously. And that’s just two of the majors.
On the other end of the supply chain, energy suppliers – including ours – are bucking the trend for the feared outflow of foreign investment in light of the impending possibility of Brexit’s economic and political upheaval. Despite withdrawals in other areas of the economy and industry, overseas investors are able to see the opportunity the energy transition offers – and the UK is leading this in many aspects. Mitsui has joined us on our journey with a £10 million investment in Tonik as part of a wider raise. Mitsubishi has also entered the UK energy sector too with a 20 per cent stake in Ovo energy. These are clear endorsements in strategies that combine renewable energy with customer-centric, technology-enabled propositions.onsumers are already voting with their feet, and investment is supporting it. This is an exciting place to be.
Changing the conversation
Despite what the headlines say, there’s plenty to be optimistic about. There is clear evidence of innovation and investment in renewable supply, infrastructure and technology – and, crucially, rapidly growing demand for all three. There are growing pains, winners and losers, sure – but when the dust settles we’ll look back on this time as a period of rapid and positive progress. We’ll have a smarter, greener and more efficient energy ecosystem that delivers better for consumers, the economy and the environment. And that is very much worth striving for.