Net zero by 2050, or even 2035: are consumers willing to wait that long? Every day you can read stories about more solar and wind capacity, better batteries, and new technologies that will help consumers to take control of their consumption, but where is the response from energy retailers to ensure they can take advantage? You might be forgiven for thinking that the energy market was unconcerned about the pace of the transition. However, there is definitely a sense of urgency within the industry to meet their promises and satisfy consumers. The key question is how energy companies can take products out from the innovation departments and early adopter programs and get them out into the world. 

Gorilla talk to dozens of energy retailers around the world every month; no one more so than CEO Ruben van den Bossche and VP of Product and Engineering Joris van Genechten. Over the last few months, Ruben and Joris have spoken to over 30 energy retailers, both customers and prospects. Ruben and Joris sat down to discuss their learnings as leaders in energy data management and the experiences they have had working with so many of the world’s largest energy retailers. In the first part of this series, Ruben and Joris sought to answer two key questions: What are the key takeaways from their recent conversations with retailers, and what is really happening in the energy retail world?

Seeking a path towards sustainable growth

Joris: 

There is an enormous drive among energy retailers to improve their processes and become more sustainable and green. This is evident in the new talent they're hiring - people who have actively chosen to work towards making a positive environmental impact. While their innovation can sometimes appear slow, this isn't due to unwillingness. Rather, it's because achieving these changes is inherently complex, requiring unprecedented cross-functional and cross-departmental collaboration.

At the same time, there's increased attention on long-term financial sustainability, particularly in light of the recent energy crisis where many companies went bust. This adds another layer of complexity to their green initiatives and new product development. Companies must now carefully balance their environmental ambitions with financial viability, ensuring that any changes work sustainably for both the supplier and the retailer in the long term.

These companies are genuinely committed to innovation and improvement, but they've become somewhat more risk-averse as they try to navigate this dual challenge: making the world a better place while ensuring their own long-term survival. Every initiative needs to consider both operational and financial aspects in creating better, greener energy retail solutions. It's about finding a path to sustainable growth that works from both an environmental and business perspective.

Ruben:

Complexity and size create barriers to innovation

Joris:

Energy retailers are trying to introduce new, more sustainable products and offerings, but often struggle to scale these beyond a small pilot or trial. The challenge lies in the immense complexity involved in making changes across their entire business.

Introducing a new green product or service involves much more than just pricing and customer offerings. It requires coordination across numerous departments - from invoicing and customer-facing systems, to forecasting and trading, to financial analysis on profitability. These are massive, siloed organizations, and getting all the pieces to work together in an end-to-end fashion is extremely difficult.

For example, with bi-directional energy (e.g. customers selling renewable energy back to the grid), retailers need to be able to accurately forecast both consumption and generation. They have to adapt their trading operations, update invoicing, and analyze the financial impact. Tying all of these disparate elements together in a scalable way is a huge challenge.

While the retailers do have a genuine drive and willingness to innovate and become more sustainable, their siloed, piecemeal approach ends up slowing down progress. They get stuck trying to solve the problem in a fragmented way, rather than taking a truly holistic, cross-functional view to transform their entire operations.

From the customer perspective, this can seem frustratingly slow. But the underlying issue is the immense complexity these organizations face in overhauling deeply entrenched systems and processes. It's not for lack of desire, but rather the formidable challenge of executing widespread, fundamental change across their massive, segmented businesses.

‍Ruben:‍

From an energy retailer's point of view, you can innovate by inventing new products, but innovation is only successful if you can roll it out to your entire customer base. And I think the main challenge there is driving that customer adoption. It needs to be easy to understand. It needs to be as easy to adopt as possible. And you don't do that if you need to think about your energy consumption day in, day out, or watch your text messages rolling in. That's not the future. That's maybe an intermittent thing for the energy early adopters. But it's not how the energy world will work in five years.

Prices must support net-zero goals

Joris:

I think a good example of how this already works is when you look at large B2B players: they have flex contracts. A flex contract is where the consumer themselves can decide how they trade by keeping track of the market or by having a process where they can shift some of their production facilities to use energy at a more suitable time.

But if you look at how this is handled on the retailer side, there is a very per customer basis. There are specific people assigned to those contracts to make sure that the billing and everything is correct. So that is a very manual process on the retailer side to offer that flexibility for the large B2Bs, which is of course amazing that they do that. But if you want to scale that to a B2C or to an SME portfolio that will require way more automation of all of those processes and way more smart systems to be able to facilitate that. The manual work that now has to be put into making all of that a reality is just not scalable.

Ruben: 

I agree. And that's still not even thinking about the carbon free aspect of it. Bringing together affordability and the low carbon energy is going to be crucial if we want to meet the 2030 and 2050 net-zero goals as a society. 

And while there's definitely a willingness to do more in the mindset of energy consumers in the residential space, they will need price signals. And it’s the same  in the I&C space. 

For example, in a steel factory the cost of producing steel is between 20 and 40% of the total cost of the steel. As much as the owners of that company will want to go zero carbon, they will need price signals in order to achieve that because otherwise they'll just lose their market share.

Joris: 

Picking on what you said in the beginning as well, I think there is definitely an early adopter group of customers that is willing to pay attention and put in some of the work. But from talking to retailers on the B2C side, to get across the chasm and make it possible, a lot of it will need to be automated in a smart way, because as a consumer you don’t want to think about your energy retailer. Like what you want is you get your bills. They're always lower than I expect. And if they're higher, I want to know in advance and why, but that's about it. So if we want to make it smarter, if we want to make it more green, if we want to tell people, this is how your energy is produced, it's going to really need to be a push from the energy retailer side to lower that threshold for the consumer to do so. Because the bigger that is, the longer that struggle on that will be.

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