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How new entrant suppliers are changing the way we buy energy

When we look back to the energy industry of the 1990s we see an industry focused on market opening, on the journey towards competition; fast forwarding to the 2000s consolidation led to a dominant “Big Six” suppliers. So, how will we look back on the 2010s? We might look at an industry on the journey to decarbonisation, towards Smart, but we will also look back at the plethora of new entrant suppliers that successfully joined the market and reflect on why they were successful, and what they offered us as consumers. 

New entrants to any industry bring innovation and new ways of thinking with them. For me, the key differentiator in energy has been personalisation, providing customers with something more than just a standard product to keep the lights on. In this blog, we’ve pulled out just four of the ways that new entrants are choosing to offer us something more:

  • control – as energy bills have escalated over the last 10 years, control over what we are spending has become more important. Several of the new entrant suppliers have tapped into this. First Utility was particularly quick off the mark with accurate billing promises and energy usage analytics; and Ovo looks at this a different way, offering direct debit options where the customer can choose their monthly payment amount
  • feel good factor – with climate change constantly in the news, it’s not surprising that several new entrants have sought to soften the guilt of our own impact on the planet by offering renewable-energy-based tariffs. Good Energy, Ecotricity and LoCO2 have all based their brands on giving us a warm and fuzzy feeling by making sure that at least some of the energy we are buying comes from renewable sources
  • multi-service simplicity – as our lives get busier our list of must have home services is only getting longer – gas, electric, mobile, broadband, Netflix, etc. Utility Warehouse, First Utility and others have tapped into this trend and are offering bundled services and unified billing – so there is just one number to call and one person to pay
  • extra energy services – having an energy supplier is no help when your boiler breaks or your electric car needs charging miles from home. Enter the energy services provider. Ecotricity, for example, offer a network of super-fast car charging points across the country and Flow Energy offer innovative microgeneration boiler systems alongside their energy tariffs.

What comes next? If the latest new entrants are anything to go by, then the last few years of this decade could well be dominated by those offering:

  • a local link – several community energy companies have entered the market recently, including Robin Hood Energy in Nottingham, Bristol Energy, Plymouth Energy Community and Southend Energy to name just a few. Intriguingly we are also starting to see partnerships emerge between these new localised brands and some of the more established independent suppliers
  • new pricing models – we are just starting to see some green shoots of innovation in pricing models, from companies like Tonik Energy – who are combining green credentials with a pricing model that incentivises the supplier to help the customer save energy and reduce their bills

The 2010s are proving to be a decade in which new entrants have shaken up customer propositions in energy by offering something more, and they have been successful as a result. It hasn’t been all plain sailing though – watch out for our next blog in this series, when we will highlight some of the potential pitfalls they face.

Back to October 2016


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