So Energy’s (SE) new chief executive has said she believes the vertically integrated model for energy retail is vital in the transition to net zero, adding that key players need “fingers in all pies”.
Monica Collings was speaking to Utility Week following the announcement this morning (27 August) that Irish utility ESB had acquired a more than 75 per cent stake in the UK disruptor brand for an undisclosed sum, merging it with ESB’s GB energy retail arm.
ESB entered the GB supply market in 2018 but has had a presence in the UK for almost 30 years. During that time it has invested £1.7 billion (€2 billion) in generation assets like windfarms West Durham, Fullabrook and Mynydd y Betws.
Collings, who was managing director at ESB Energy prior to the deal, said ESB believes customers are becoming more savvy when it comes to greenwashing – a contentious issue in the sector that has led to the government launching an investigation. As such the vertically integrated model allows companies to prove their green credentials more easily.
She said: “For me there is something really important about the transition, particularly in transport, because we have consumers across the market that are still fairly disengaged with energy.
“There’s a real challenge because I get customers writing to me all the time about how they fix their tariffs, but they think that they are fixing a monthly price and that they can use as much energy as they like. So when they actually come to understand how that works, it’s quite difficult.
“When customers get an EV, they have to understand what a kWh is, they have to understand what they are putting in their vehicles and you get this neat tipping point where a customer goes from being disengaged to becoming very engaged.
“You almost become hypersensitive to it because you start as a consumer thinking about how am I going to heat my home, how am I going to drive more efficient solutions? Then you ask how genuinely green is my energy supplier?
“I think it’s all connected. If you are genuinely going to be a player in this net-zero race you have to have fingers in all of those different pies in that respect, you have to be involved.”
Her view is shared by Nikki Flanders, managing director of SSE’s customer services division, who recently told Utility Week that supplying power via a vertically integrated business model provides the best solution to greenwashing.
Collings further spoke about ESB’s growth ambitions in the GB market. The deal will see ESB Energy’s 80,000 customers merge with SE’s 310,000 and the latter’s co-founder Simon Oscroft said the company aims to become the UK’s “next big green energy supplier”.
While Collings admitted the ambition in Britain was to grow a business at scale, she would not put a figure on the number of customers it is aiming for.
She also revealed the company was bringing in Shane Casey, ESB’s head of finance, as SE’s chief financial officer.
She added: “What we immediately need to concern ourselves with is, how do we transition to bring those two businesses together. Then we need to look at how we establish ourselves within the GB market to become that next big energy supplier.
“What we will do is work with Simon and Charlie and Shane, the CFO, who we are bringing in as well to support us on developing a business plan and an outlook for the next five years that we’ll go back to the ESB board and secure support for. As it stands what we are not doing at this point is committing to particular growth ambitions but suffice to say our ambitions are huge.”