Why improving your B2B service is key to surviving in the changing energy market
Why improving your B2B service is key to surviving in the changing energy market

In the past few decades, the energy market has been extensively liberalised. During this period, the energy supply system has gone from just a handful of suppliers and network operators, to one where literally millions of suppliers have entered the market. Many of these are mid- and small-scale renewable generators, including solar PV and wind power.

As new players enter the market, traditional systems and roles are being put under pressure. This means energy providers need to offer new, valuable services and redefine their role to remain relevant in the new market.

One of the most important roles in the B2B energy supply chain is that of energy brokers and salespeople. These professionals enable variable supply capabilities to be matched to variable demand requirements. They have found a valuable position in the market as a ‘fixer’ who arranges a defined supply at a defined price.

However, even this seemingly-secure position is swiftly becoming obsolete, as we will explore further below. There are intriguing possibilities for these professionals to find new roles, as we will see.

The entire B2B energy service market is changing fast, and many traditional roles are being replaced or redefined. In this article we will look at the many factors involved, and explore ways of redefining these ‘endangered’ roles in a way that capitalises on their value to the market.

Grid operators and suppliers under pressure

The liberalisation of the energy market has brought both opportunities and new challenges.

For existing energy suppliers, this has become the ‘perfect storm’ and is putting their business model under threat. The increase in small-scale generators has brought particular challenges for network operators, who need to maintain stable supply.

However, both the supply and demand for energy are becoming less stable and more unpredictable. This means suppliers still rely on large centralised production to ensure a balance of supply on the grid. If they are unable to maintain this balance there are severe financial consequences (as we will see further on), and tougher regulations are making this harder to achieve.

Surging demand

Grid operators have the expensive responsibility of maintaining the aging distribution infrastructure, while accommodating an ever-increasing energy demand. According to research from McKinsey, the net power demand across Europe was an annual 3,300 TWh in 2008, and is predicted to reach 4,900 TWh in 2050.

Keeping the balance is becoming increasingly difficult due to the changing mix of power sources too. McKinsey predicts that as we approach 2050, energy from oil, nuclear and solid fuel will drop slightly or remain approximately constant. In contrast, energy from renewables is set to nearly double from their 2008 levels as we start to enter the 2030s. This means the proportion of the total mix will shift, becoming more renewables-heavy (and therefore harder to balance).

One Dark Day

When the supply-demand balance goes wrong, it can result in big fines and unexpected costs from needing to import electricity across borders (and at short notice). This was especially apparent for Tennet, a dutch grid operator, who experienced a nightmare scenario in 2018 when a bad weather report led to a nationwide electricity shortage.

Due to an unexpectedly dark and not-windy morning, there was an increased demand for electricity but a great shortage of supply from solar panels and wind generation.

As a result, Tennet (the grid operator) had to request emergency generation and an expensive, short-notice import of hundreds of megawatts from Germany and Belgium. This was a cost they had to cover themselves.

Tennet plans to invest €28billion in the next few years, to improve its network in the Netherlands and Germany. Additionally, the Netherlands will soon be connected to the Danish network too.

While this might mean a degree of stability if one country faces a shortage – it also raises the question of how it would be addressed if a shortage was experienced in all six of the countries simultaneously.

According to Tennet’s Mel Kroon, the current contribution of renewables such as solar and wind to the Dutch grid is in the region of 10%, but this is expected to reach a share of around 80% in the near future, making these kinds of problems more likely.

Old roles and models are under threat

For energy brokers and B2B salespeople, the existential threat is very real and fast approaching. However there is also a light at the end of the tunnel here, and a lucrative possibility for those who are able to redefine their roles and assert their value in the new energy supply model. Let’s see what that might look like.

The current model for energy brokerage and sales is still based on the traditional pattern which was established in the earliest days of energy market liberalisation.

According to the old model, when a business consumer needs more supply capacity, they would need to arrange this (in advance) and fix a price with a sales representative. This is a slow process, requiring phone calls, some waiting time, and a degree of blind speculation on the energy spot price market. For their role in the process, the brokers and salespeople add cost to the energy price. But this model will not work for much longer.

As industrial energy consumers see the long-term benefits of installing their own renewable supply and storage capabilities, they start to take on a new active role themselves. They are becoming market-participating ‘prosumers’, who contribute excess energy production to their regional grid, or store it using any number of energy storage mechanisms (depending on the nature of their business).

Rapid switching is for machines, not people

This renewables-based infrastructure entails a need for a more rapid and flexible switching mechanism. This would allow supply streams to be balanced at regional and national levels rapidly, in the face of highly variable supply and demand scenarios.

Active ‘prosumers’ are able to play a role in regulating demand via energy storage, thereby smoothing the peak demand curve. This increasingly dynamic (but sometimes self-regulating) demand/supply situation makes it much harder for brokers to even have a role, let alone to reliably make a profit. This is actually now a job for a machine.

Therefore, the new role for brokers and salespeople is one that leverages their market expertise to enable these new, fast-switching systems. They can provide value by advising and arranging hardware installation, and using software to enable a new customer self-service.

In this way the service burden is shifted onto software, while the actual value of the personal service is bumped up into the category of ‘valued consultant’.

Staying ahead: What your organisation needs to do

There are unique pain-points that will affect your organisation, depending on your specific role within the energy supply chain. However, as the market is experiencing a dramatic and rapid transformation, every part of the energy supply network needs to be prepared to adapt to new roles - or face extinction.

Ensuring your organisation has a high level of embedded entrepreneurship can help the business to remain nimble, but there should also be a more formal and centralised approach towards reviewing the changing landscape and how your organisation fits in.

In the face of strong competition from new market entrants, existing processes will need to be streamlined and automated as much as possible, to match the models being used by new companies who are coming with an entirely fresh approach.

Offering value via service and expertise

One major challenge will be the shift in focus towards a customer-centred service, which enables business customers to gain more control over their participation in the energy market.

For salespeople (who have become accustomed to being the gate-keepers of energy supply and pricing), this can be a tough pill to swallow. However, by taking on a new role as enablers and consultants, salespeople actually increase the value of their contribution.

By adopting more technology and responsive algorithms, many hours of labour can be saved. Prices can be determined in real-time, and assets automatically switched by automated control mechanisms. This ensures a continuity of supply and makes the need to negotiate extra supply/prices entirely redundant.

Centrica pivots toward service-based value

One example of how companies are already choosing new roles is that of international energy giant, Centrica. In 2020, it announced that the company was shifting away from a focus on its traditional energy supply business to a simpler, customer-focused business model.

In January 2021, the company announced that it was supporting global technology company ABB in its drive towards electrification. For this project, Centrica’s engineers are being used to help with the installation of charging points for its vehicles, using their skills and expertise in installation combined with the charging technology developed by ABB.

This is an excellent example of collaboration between companies, and the shift from a traditional supply-oriented model to one which reflects the value of expertise, and the need for a service-oriented approach.

Experience and expertise are your strengths

For all energy supply companies, there will need to be an ongoing process of identifying your key strengths and challenges.

The development of a defined expertise-base and, consequently, a repackaging of this into marketable consultancy or service products is the key to maintaining a strong position. For experienced energy-industry professionals, there remains a strong role for those who are capable and knowledgeable in the maintenance and development of enabling technologies.

Someone will need to install these technologies too, so for valuable electrical engineers there is certainly no threat to their position either – rather the specifics of their role will change.

Switching services

There remains a need for on-demand power when renewable sources do not suffice. There is a future role for a regulatory service that ensures a smooth balancing operation, seamless switching between assets across the grid, onboarding for new market participants, and the management of their contracts and transactions.

In addition, the grid still needs a service that ensures the physical infrastructure is maintained and improved, fixes physical problems when they occur, and installs new connections, sensors and switching systems.

Energy suppliers are perfectly situated to switch to becoming solutions providers, and problem-solvers for the new market demands. There is a new opening for companies to take the role of centralised energy storage too, to ensure excess energy can be utilised at a later point when it is needed.

As with the Reserve Requirement (also known as the Liquidity or Reserve Ratio) used by banks to ensure enough cash is kept to cover possible withdrawals, there would need to be a sufficient reserve of stored or on-demand power available to manage shortfalls. This reserve level could be quite high; the conditions that cause a renewable-generation deficit (no wind, cloudy weather) are likely to affect all ‘prosumers’ simultaneously.  This means the entire national grid might (theoretically) switch from net over-production to net consumption at full capacity, in an instant.

It may be necessary for an organisation to make certain that any new renewable energy generation is proportionally matched to a certain level of storage capacity (within the smart grid, locally). This would be a valuable service for the grid, and could be easy to justify from a financing perspective because it is directly tied to a new contract with known income parameters.

What can Jules do for you?

Jules offers a range of solutions to enable energy suppliers and consumers to seamlessly work together in a customer-enabled user experience. Based on the self-service model of the future, Jules’ powerful platform has endless possibilities for the new energy transition economy.