Hannah Sword chatted with Raghav Singh, Director of Business Supply at EDF, as part of our expert interview series. They discussed the challenges and opportunities within business energy. From useful data and proactive customers, to economics and electrification.
The full interview is on our website, but here are the key takeaways.
The electrification boom hasn’t happened, yet
Raghav explained that, despite what the forecasts suggested, electrification hasn’t taken off yet.
“We are seeing increased demand from players in the big data and AI space. But the sharpness of electrification hasn’t been as steep as the forecasts stated. UK electricity demand peaked at around 350 TWh per year in the early 2000s, but today we’re below 300 TWh in terms of total demand across the market.”
Why hasn’t it taken off? Raghav explained it’s multifaceted but “right now, the economics don’t stack up very well” for business customers. Network and system costs keep rising. Non-energy costs make up ~60% of a typical business energy bill. Falling demand covers those rising fixed costs so unit price goes up.
However, he stressed it’s still worthwhile but energy partners have a huge role to play in making it happen. “We need to balance short-term economic challenges with long-term deliverables. For net zero, sustainability, corporate and commercial ambitions.”
The first hurdle is affordability/The commercial focus could drive changes
Raghav shared some home truths about UK business energy having some of the highest rates in Europe. Hyperinflation, supply chain issues and horrendous geopolitics mean “for many businesses, their hands are simply tied.” Budget remains the biggest deciding factor, regardless of business goals and environmental appetite. Boards want fast ROI and little or no upfront capital spend.
He stressed however, that net zero still matters and rightly so. “Customers are at different stages of their journey to energy maturity and their path to net zero. Having services, offers and solutions that are tailored to their specific requirements, which are coherent with their commercial strategy, is extremely important.”
The silver lining, according to Raghav, is that suppliers have better access to and are having conversations with more stakeholders.
“CFOs and CEOs are now really interested in energy. That gives our key contacts (the energy manager, the procurement director) a seat at the table for longer-term strategic decisions and a share of future investment.”
A tailored approach facilitated by data
With a more “nuanced” business customer base, Raghav welcomes the data made available with MHHS. “Granular data for all shapes and sizes of customers is going to be a hugely beneficial thing if treated in the right way.” However, he added a cautionary note: “We need to be realistic and take it as an enabler rather than the solution in itself.”
He added suppliers need to provide the solutions so customers can benefit the most. “We should make use of the data through tangible solutions that firstly help customers manage their costs. Then hopefully later down the line, they’ll give rise to more proactive solutions to manage energy and embrace pricing volatility.”
Raghav believes it’s all about balance. We need to address the key drivers for each audience to help everyone reap the largest benefits from electrification.
“We need to cover the carbon and the economic benefits. There’s a sweet spot in the middle to satisfy both our business, demand customers, and the generators and developers we work with on the supply side.”
And that means working together for the greater good: “No one player or group can solve these issues themselves. It’s extremely important that suppliers, generators, government, the regulator, the system operator and our customer base all work in unison.”
One thing’s for sure; it’s going to be an interesting journey to a more proactive and flexible energy future for business customers, suppliers and generators.
How are you using data to tailor your customer offer?
We’ve set out a few ideas in our article about how B2B energy data can drive better and faster commercial decisions. Or get in touch to learn what we’re seeing from partners across the industry. It may unlock some opportunities your organisation hasn’t spotted yet.
Watch the full interview for more of Raghav’s thoughts.
