The independent supplier launched the Ovo Communities platform today, and aims to use its back office systems and expertise to help local authorities and community groups to set up their own energy supply company.
Stephen Fitzpatrick, founder and chief executive at Ovo, said that the plan would help to build trust in the sector because trusted organisations, such as local councils, could supply energy, and that up to 500 new entrants could be created.
He said: “By opening up our technology to partners, we can dramatically reduce the start up and running costs for anybody who wants to run their own energy service company.”
He added this would increase the competitiveness of the UK energy market, and that while increasing competition for his own business may seem strange, this was the “direction of travel” within the sector and he wanted Ovo “to be there first”.
For any organisations that sign up to the Ovo Communities platform, the independent supplier will charge up to 3 per cent for the wholesale costs that are incurred during the process, with any savings “being passed through” to consumers.
Fitzpatrick is confident that this initiative will not fall foul of Ofgem’s Retail Market Review (RMR) four tariff cap and he said a community supplier could apply for a licence lite, meaning that the tariffs being offered do not count as Ovo tariffs.
Another route around the RMR limits would be for the community tariffs to be offered as a regional tariff by Ovo – allowing it to vary from region to region – but still only fill one of the four tariffs options.
Energy secretary Ed Davey, who was at the launch, said the Ovo platform to support community energy companies was “an incredibly interesting business model” and would help to reach the most vulnerable energy consumers.
He added: “It’s a fascinating initiative and I think it will help to deliver more competition and the type of energy market we want to see.”