A revolution is taking place in the energy supply world, and retailers who don’t respond to the changes will be left behind. To get ahead in this changing landscape, you need to understand what is driving businesses, in the UK and elsewhere, to demand greater transparency and more data from their energy suppliers.
The green fairytale is over
Once upon a time, energy retailers could market their energy tariffs as “green” simply by ensuring that in the course of a year, they bought enough REGOs to match the energy sold to customers. It didn’t matter if you had no contracts with renewable suppliers and bought most of your energy from fossil fuel sources; for the cost of a few pence per REGO, you could magically turn your whole supply green at annual reconciliation time.
This method is still compliant within the regulatory framework, but high-volume energy users are increasingly questioning this route, thanks to growing media coverage and public awareness. They are questioning “green” tariffs where the retailer gives them no clue about the detail of their sourcing and demanding more data. Why? Because this data is the key to making genuine progress on climate goals.
Many high-volume energy users have huge but untapped potential to increase the proportion of renewables in their supply mix, by changing the way they work. They might choose to charge their fleet of electric vehicles when renewable generation is high, or power down energy-intensive operations when the mix in the grid is dominated by fossil fuels. But they can only optimise their energy use in this way if they have access to accurate data in half-hourly chunks.
Many large businesses have already set net zero goals, but the days of getting away with vague promises are over. In August 2021, the Institutional Investors Group on Climate Change issued a call for businesses to publicly meet various detailed metrics as proof that they are actually on track with their climate goals. This group represents investors who collectively manage over $14 trillion of assets; a sign that businesses need to make genuine progress on emissions if they want continued access to investor funds.
Meanwhile, many businesses are looking not just at their direct emissions but those in their value chain. This means any business that offers services to other businesses, such as supply, distribution or waste disposal, can expect their emissions to come under scrutiny from their business clients.
Add regulatory requirements and more environmentally aware customers to the mix, and it is obvious why big energy users feel that they are in the spotlight and under pressure to come up with a robust strategy for decarbonising their energy supply.
Huge opportunity for retailers
Businesses desperately want the data that can help them decarbonise, and retailers are perfectly placed not just to offer this but to add value with their expertise. ENTRNCE is currently working with several high-level corporate clients in our native Netherlands, including Schiphol International Airport and the Dutch national rail company.
Corporate power purchase agreements have long been seen as a good option for large businesses, but now they are evolving. Many businesses are fully aware that a renewable generator can’t provide 100% of their energy needs, 100% of the time, and they want to know that the natural intermittency of renewables is being managed in the greenest possible way. This is another opportunity for retailers to shine.
The potential market is huge. Over the next five years, the demand for green energy from business users is estimated to be around eight terawatt hours. Only retailers who understand what businesses need in this new world can take full advantage of this market. Our free-to-download Energy Trends report gives more detail on how the market is changing and what the opportunities are for smart retailers. If you haven’t yet heard of the 4D revolution, it is essential reading to avoid being left behind.