The saving-energy business
While many governments, corporations and individuals want to do something to help with climate change, their actions are generally unconnected, and are often driven apart by market mechanisms that are counter-productive when it comes to significant carbon reduction.
The way we supply energy to homes and businesses is responsible for more than half of our carbon emissions, and if our total carbon emissions are to reduce substantially, the energy supply chain - all the way from customers to retailers to generators - will have a critical role to play. Not just on the margins, but in the mass market, with products and services that must be genuinely popular.
In the current model energy supply businesses need to supply more energy or the same energy at higher prices to improve their results. But everyone's long-term interests are better served by reducing carbon and energy impacts. Although customers buy energy, they're actually interested in benefiting from the services that energy allows, like heating and lighting, rather than the energy itself.
Meanwhile, energy companies - who have valuable relationships with millions of customers - don't make the most out of these relationships: they are selling a generic product with very little ability to differentiate except price - the kind of conditions that often lead to price wars. As people learn to use electricity and gas more efficiently, differentiation, diversification, and customer value become critically important for energy retailers.
Governments are beginning to respond: in many territories new legislation will require energy suppliers to sell less energy year-on-year. In the UK for example, the Suppliers Obligation will introduce market externalities that are intended to transform the energy supply market into something that more resembles an 'energy services' market.
Many people are looking at this as a regulatory problem, and it certainly does have regulatory components. But the core business challenge: how do energy companies survive a wholesale inversion of their commercial model, and keep essential services running without interruption while building their competitive position, is still one that needs clearer resolution.
While business cases have been made, the pragmatic picture of how this will work with real businesses, customers, propositions and cashflow remains very blurred. This project is developing integrated commercial strategies to help energy supply businesses to turn carbon-saving (helping their customers achieve their objectives in actual fact) into a powerful business asset, helping them to become immediately more competitive, and preparing them to take maximum advantage of new and transformed energy markets as they emerge.
Working with large and small energy companies, governments and other stakeholders, we are developing novel commercial models from provisioning and logistics to customer-facing products and services that can deliver a win-win for business and the environment.