Lying off the coast of Queensland, north east Australia, the Great Barrier Reef is not something which often crops up in discussions about the UK energy retail sector, yet it perhaps symbolises the importance of the mission one chief executive has set out on.
Speaking to Utility Week at the Notting Hill offices of Ovo Energy, retail chief executive Adrian Letts wants to talk about the much bigger issue facing the UK market – climate change.
In his first interview since taking up the role at the start of this year, the amiable Australian recounted a touching conversation he had with one of his children ahead of a visit to his homeland at Christmas.
“When your children start saying things to you like ‘Dad, can we go and visit the Great Barrier Reef before it’s dead?’ it’s is a real wakeup call – we do have a climate emergency. I think customer awareness and understanding that there is a problem is increasing”, he says.
That understanding of the greatest issue facing humanity is what has driven Letts to the sector after more than three years as managing director of Tesco Online.
Ovo was founded in 2009 by its chief executive Stephen Fitzpatrick as a challenge to the big six energy suppliers. It currently has around 1.5 million customers across the group and employs nearly 2,000 people.
The company has gone from strength to strength and earlier this year its retail business received a £200 million cash injection from the Mitsubishi Corporation for a 20 per cent stake, valuing the company at £1 billion.
Letts takes the helm at a time of exciting and radical change for Ovo, with the supplier having agreed a deal to take over big six supplier SSE’s retail arm for £500 million.
He is clearly ready to implement change for the good of the planet but understands this will not happen overnight.
“I love the adage ‘a waterfall begins with one drop’. Each of us has a role to play. Understanding what they are doing that contributes to carbon is something that we would really like to help customers with”, he says.
Letts’ vision is to encourage incremental change among Ovo’s customers, or members as he like to refer to them.
“From a retail standpoint our vision is very much providing and powering progress to clean and affordable energy through technology. We have released Plan Zero and we have set out our course to measure the success of our business against carbon reduction. Most importantly, how can we halve our customers’ carbon footprint by 2030?
“The vision of the business is very much, how do you create and integrate a proposition to help customers do that? Both supplying them cleaner energy but also helping them understand the impact of their household consumption on their carbon footprint. That is, I think, going to be driven through providing them with the right information and tools and then the right technology to allow them to do that.”
Letts believes that there is a huge opportunity for the challenger brand, given that household energy consumption is a key contributor to carbon, to support customers on the journey to the government’s net zero 2050 target.
Specifically data will be Ovo’s key weapon in the fight to reduce carbon emissions.
“The first thing we would like to make people aware of is, what their carbon footprint is. We have launched a product called the carbon tracker which allows you to understand your personal impact on carbon.
“The second thing is we encourage customers to take a new product – Ovo Beyond – which marries the data and insight that we can provide customers through a smart meter to a better understanding of how they are using energy in addition to green energy supply.
“Understanding and measuring something helps you go a long way to changing.”
Green tariffs have been much talked about over the past year, with a number of challenger brands offering “100 per cent renewable energy”. In July Eon became the first big six supplier to provide a fully renewable offering.
Despite its determination to reduce carbon, Ovo currently only offers 50 per cent renewable energy as standard. Letts is insistent however that accessibility and affordability are key priorities for its business model.
For Ovo, it’s the small changes which count.
He continues: “We were the first energy supplier to exclude coal and nuclear as part of the standard mix. One of the most important things for us is making it accessible for everybody and making it affordable for everybody. Some of the new technology hasn’t quite got to mass market yet.
“But to make a change on your carbon footprint doesn’t mean you have to put a battery in your house and a solar panel on your roof, it could be as simple as changing your lights to LED lighting or thinking about how you manage your thermostat. That sort of thinking is what we need to make real progress.”
He adds: “The contribution that each of us make individually is incredibly powerful. If everybody in the country turned down their thermostat by one degree we would see 1.6 million tonnes less carbon every year, which is so powerful.”
Prior to his time at Tesco Letts co-founded streaming service Blinkbox, a business which was sold to Talk Talk where he became managing director for TV at the group. He is a man of impeccable digital credentials.
“The Tesco Online experience is very analogous, that relationship you are developing through a digital touchpoint is incredibly important as it is for Ovo on an ongoing basis.
“The visit of our smart meter engineer to do the installation is very analogous to the visit of the grocery home shopping delivery driver.
“I think people forget that the smart meter engineer is the manifestation of the company. That for me is incredibly exciting and incredibly powerful. It’s all very well we talk about digital engagement but I think that starts with human engagement.
“We thought a lot about that at Tesco and I’m thinking a lot about it here at Ovo.”
His time in the retail sector has clearly made its mark and Letts understands how differentiation, which is fundamental in the grocery sector, is just as fundamental in the utilities sector.
“Innovation is constant, striving to offer a better proposition needs to be something that is forefront in my mind. I’d like to think everybody can wake up every morning and think how can we do it better, how can we reduce carbon faster?”
The answer lies, in part, in digitisation.
Digitisation, it seems, is everywhere in the energy sector. Increasingly suppliers are all vying to show off their digital credentials in light of increased customer expectations. A point Letts is keen to make.
“Historically, when you had to do something or build a relationship with your energy supplier, you had to find them. Increasingly, you can do a lot more of this online.
“The expectation of customers to what that means is increasing. But also, not just how do I manage my account but what’s the information that I get, how am I consuming my energy, what impact does that have on the climate?”
As well as a more digitised service, Letts understands that the change in energy technologies such as battery storage and grid management is something a modern retailer needs to keep an eye on.
“How technology is changing those things is something we need to be aware of and we’re very keen to embrace as Ovo because it does make such a material difference to our future.”
Of course the biggest issue on everyone’s mind at the moment is Ovo’s planned £500 million acquisition of SSE’s retail arm in an audacious move which looks set to really shake up the market.
While the Competition and Markets Authority (CMA) conducts its investigation into the merger, there is little Letts can say about it at present. He does however concede it is an “amazing opportunity” for the challenger brand’s decarbonisation ambitions.
“From our perspective, the SSE deal, the opportunity, is amazing. We see huge amounts of alignment in terms of the customers’ centricity and also the focus on sustainability.
“SSE has won numerous awards for their customer service and I think that’s hugely additive to us.
“I think together we have an even bigger opportunity of really impacting carbon.”
The proposed deal between Ovo and SSE would see Ovo jump forward several places and sit as the second largest supplier, second only to Centrica-owned British Gas.
SSE has 5.7 million energy customers which means if it is successfully sold to Ovo, the latter would have 7 million in total.
A decision on the game-changing deal is expected in the new year.
With the planet facing a global catastrophe, it’s clear Adrian Letts is a man who sees the enormous potential energy companies have to avert the danger. With the huge opportunity coming from the SSE acquisition, there is certainly a lot to be excited about at Ovo Energy.