2012 will see the start of the break up of the so-called ‘Big Six’ energy providers, claims Navetas Energy Management, as consumer pressure instigates dramatic changes in the market.
2012 will see the start of the break up of the so-called ‘Big Six’ energy providers, claims Navetas Energy Management, as consumer pressure instigates dramatic changes in the market. According to Chris Saunders, CEO of Navetas, the wave of energy price rises in 2011, looming smart meter rollout and drive for more renewable energy sources will place energy issues firmly on the political and social agenda this year.
Chris Saunders comments on his predictions for the top drivers in the energy market in 2012:
1) Clarity will be key.
Energy providers and the Government will come under increased consumer demand for clarity and transparency over their energy consumption and energy bills. In 2011, British Gas pledged more transparent billing, but after facing a year of significant price rises, consumer pressure for a greater understanding of how they are consuming energy is already at an all time high and will only further increase in 2012.
Energy companies are taking steps to introduce simplified tariffs but this will do little to assist consumers in their energy efficiency drive. If they respond to the wrong problem, energy suppliers face alienating their customers even further.
2) Energy displays and networks will become central to the smart meter roll out
2012 and 2013 will continue to be foundation years for the smart meter roll out, but they could be critical in ensuring consumers are brought along on the journey before the mass market rollout from 2014. Access to energy data in the home, through communication networks and energy displays, will be placed in the spotlight and become pivotal to the success of the smart meter rollout.
The Department for Energy and Climate Change is expected to finalise specifications for in-home displays in Q1 2012, but it’s critical that these do not compromise the possibility of technological innovation in the future and tie consumers to a legacy technology when the rollout is complete in 2020. This will be a key focus for the recently formed Consumer Energy Display Industry Group (CEDIG), of which Navetas is a founding member.
3) New, customer-savvy entrants to the energy market
The lack of consumer trust in energy suppliers, which has recently been highlighted in a report by consumer watchdog Consumer Focus, coupled with the formation of exact specifications for smart meters expected in 2012, could pave the way for a surge of new entrants to the energy market, as a range of companies from other sectors look seriously at adding energy services to their offering.
The energy landscape could look very different by the end of 2012 as it begins to align more closely with other ‘retail’ markets, rather than utility provision, and a range of other businesses move into the sector – from telcos to supermarkets. These companies already have a strong hold on the ‘customer relationship’ and we could see some of the Big Six opting to become ‘energy distributors’, leaving the field open for more retail-focused organisations to take over the end services for users.
As Saunders concludes: “The issues in the energy market are now placing pressure on the Government, energy suppliers and consumers, as we move into 2012. The Government is under intense pressure to deliver on the promises of smart meters; energy suppliers are facing hostility from customers over price rises; and energy users are feeling the pinch, with growing frustration that they have no way of knowing what really accounts for the extra money they are paying on their monthly energy bills.
“The combination of all these pressures means 2012 represents a critical juncture for the energy sector. We could see a dramatic shift away from the market dynamics that have defined the energy market since privatisation; and one that sees new technologies embraced, new commercial propositions and a more consumer-friendly set up.”