Which type of energy supplier should you be today?

The most trivial questions at first glance always reveal a more complex reality. This is the case with the question posed in the title. Recent developments in the energy markets have given rise to two main approaches:

The supplier established as the link between producers and consumers, responsible for the marketing of energy. 

In this case, the energy supplier is focused on the transaction between producers and consumers, whether there is an energy market as an intermediary or not. His business is not very dependent on the specificities of energy and can easily draw on the experiences of other sectors that have experienced the liberalization of their market. 

He can market the fluids independently, but he can also provide its customers with bundle offerings of electricity and gas to help them to rationalize purchases and suppliers and save money. 

This type of supplier mainly differentiates himself by price, more recently by offering green energy. He is strongly “challenged” by comparators available today on the internet and by brokers who offer their clients to help them access the best prices amid increasingly complex and less readable offers than before.

He is also partially threatened by the PPA (Power Purchase Agreement), contracts which allow a large consumer to buy energy at negotiated prices over fairly long periods of time directly from the producer, without the intermediary of the supplier. This threat is confirmed with the development of aggregated PPAs by new intermediaries who represent a set of small or medium consumers in the establishment of a PPA with a producer.

This type of supplier is constantly under price pressure, operates with fairly small margins and usually investigates all the simple strategies allowing it to reduce this pressure:

– Integration of production

– Supply of green energy

– Extension of the client’s commitment period when signing his contract

The supplier established as a partner of the consumer to provide and develop the optimal solution

This type of supplier focuses on the services and on the (technical and economic) integration of its customer into a larger energy system. His business is rooted in the specificities of the energy world on which he largely depends. He therefore builds his job on the sidelines of the references offered by the telecom world or by the banking world.

The cross-functionalities between fluids and uses is at the heart of its activity because it is a source of productivity and value for its customer. It is necessarily committed to exploiting flexibilities, developing storage and sharing initiatives as well as various energy efficiency plans.

His business is more complex to develop and calls for more specialized skills. His strategy is as much economic as political. Its implementation requires more cooperation. The benefits provided to its customers come from optimizations and savings to which they give access with less concessions on its margins than the supplier of the previous type.

Very often this supplier offers its customers the energy which they consume but which they do not produce, which makes it difficult to offer it at the lowest cost or to put it in competition.

This somewhat Manichean view of suppliers does not describe hybrid models, yet existing. There is no one model better than the other: each has its own advantages and disadvantages; each is aimed at different categories of customers, both professionals and individuals and each has its own success factors.

Will we one day dare to combine the advantages of the two models by creating an aggregator of offerings, combining the fluids offered by a type 1 supplier with services sourced from external service providers or developed in-house to better control their quality? this would make it possible to be efficient and gain awareness to act on all the components of the consumer’s bill and to respond to all the customers?

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