New entrant energy retailers in the energy transition: how can they succeed?
2020 has been a year like no other. It’s hard to remember what the news covered before the Covid-19 crisis. Businesses have been challenged, with job losses and restructuring commonplace, and lockdowns across the world have put countless things on hold.
That said, the energy transition has continued to gather pace. New entrants continue to enter the market, despite companies like Tonik Energy and Yorkshire Energy going under, and companies such as Ekwateur and So Energy see the challenges the year has presented as just that: a challenge.
It is no secret being an energy retailer has its risks. A typical retail business, it can be fragmented, competitive, and low margins. So why do new entrants still make the leap, taking on the big, established suppliers?
On a recent episode of Talking New Energy, the podcast from Delta-EE, Julien Tcherna of Ekwateur and Charlie Davies of So Energy put forward two factors that differentiate their smaller businesses from the incumbents.
Big suppliers are interested in producing energy, not selling it. With low barriers to entrance, new companies can quickly establish themselves in the energy sector with initial investment and determination. As long as new entrants have reasonable expectations for growth, are patient and don’t scale up too quickly, there is huge opportunity there.
While they acknowledge they are currently far smaller than their bigger competition, both Ekwateur and So Energy believe they really can do retail better.
2. Customer service
New entrants can build a solid customer proposition into their business model from the outset, rather than needing to adapt operations in place for many years. Ekwateur, with a team made mostly of software developers, compete with EDF, Engie and Total in France by ensuring a seamless customer experience.
So Energy focus on building customer trust, suggesting it underpins the success of the transition towards net zero.
Davies shares, “If customers don’t have trust in their energy supplier, they won’t take up new products and services and the road to net zero will be much harder and longer. That will ultimately fail us all.”
To learn more about Ekwateur and So Energy’s journey as new entrants in the energy transition, listen to the episode of Talking New Energy, Life as a new entrant energy retailer in the energy transition.