In this increasingly interconnected world, UK energy firms face many challenges. Firms must have systems in place to enable simple, cost effective and accurate compliance, while making financial savings and delivering a lower cost-to-serve.
In the face of this uncertainty, here are four ways that energy firms can compete and grow their business in a more competitive and digitally enabled market place.
1 Collect revenue efficiently and reliably
There is increased focus on energy pricing and rumours of government intervention in the UK market. Therefore companies looking to raise additional funds should initially consider how they efficiently collect what they are already owed and operate at a lower cost.
The smart metering program for power suppliers provides a wealth of data that can help companies monitor demand and avoid overpaying for capacity.
The data provides opportunities to develop more innovative pricing arrangements in-line with consumer demand. 'SmartHome' technology offerings can also be used to encourage flexible users to delay consumption until off-peak times and display real time data, transforming how pricing information is currently presented to the customer.
2 Plan for the rise in operational costs
The oil price is rising from historic lows, offering respite to businesses that have been starved of funds for several years. However, greater competition, increased regulation and a national focus on reducing the growth in regulated revenues is resulting in a margin squeeze.
In this environment, the dynamic companies will thrive with their efficient, well-structured and clear plan to face the challenges ahead.
3 Actively manage the regulatory burden
Government policy in the energy market is becoming more regulated. Companies must deal with increased red tape in their dealings as a company, an employer and a member of the energy industry.
The OECD’s BEPS (Base Erosion and Profit Shifting) framework increasingly requires companies to match their economic activity and value created by employees to their corporate structure and corporate/employee filings.
New policies, such as the Apprenticeship Levy, Gender Pay Gap reporting and National Living Wage, put more pressure on employers to report. However some policies, such as the Apprenticeship Levy and the Investment incentive, offer significant value back to a company if used effectively.
Finally, the EU and UK policy in relation to energy sourcing and provision is becoming increasingly regulated. The energy generation industry in particular faces increased complexity in the fields of green energy, environmental security and infrastructure requirements.
4 A nimble business structure
Historically, the energy industry operated under a linear and centralised model of generation, transmission, distribution and supply.
The transmission and distribution elements of this model have been revolutionalised through advances in storage and transmission technology, as well as the rise in electric vehicles.
The supply chain is becoming far more complex due to greater innovation and the high number of smaller energy providers (such as onshore wind, household solar and waste conversion) producing intermittent sources of energy.
The data analytics and flexibility required to operate will change the nature of the industry. This will increase the focus on leveraging digital technology. Connected devices, machine learning, AI and robotics, offer solutions for energy firms to:
- aggressively monitor the controllable costs and achieve a cost-to-serve comparative to their competitors
- differentiate themselves from their competitors, build trust with customers, and gain advantage in an increasingly competitive marketplace
- increase their ability to deliver and capitalise on large industrial projects such as smart metering and multi-year construction programmes
- invest in their people and build the talent and skills of the next generation through training and development opportunities.
We are working with a number of dynamic organisations to help them unlock their potential for growth. To find out how we can help your business tackle the challenges facing energy firms to compete and grow, please get in touch with Amaechi Nsofor.