Energy supply is a business like no other. Often selling customers an unlimited amount of a product for a fixed price, when the cost of supplying it isn’t known until delivery occurs – and can even change afterwards. To say you need to be on your game to avoid the waves is an understatement.
Over the last 20 years energy suppliers have been at the forefront of the change in the energy market, being given the responsibility for delivering major changes associated with smart metering, increased regulatory oversight and collecting the funds to pay for infrastructure and low carbon generation assets.
The market opens exciting opportunities for those that succeed, and Cielo Energy exists to help its clients succeed. Below is our guide to key areas of focus for suppliers.
The supplier dilemma – developing tomorrow whilst delivering today.
- Focus on positive margin sales
The market is littered with businesses that have grown quickly selling at negative gross margins. Long term success rests on understanding your cost stack and avoid following those that buy customers.
- Understand the level of risks
Aside from regulatory obligations, suppliers hold several commodity and non-commodity risks. Understanding the potential size and scale of these risks, and budgeting for them is crucial.
- Manage cashflow
Income and costs will follow differences in timing no matter what contract structure your business has. Get customer invoices out on time, and collect outstanding bills.
- Deliver service
Customers will come for price, but stay for good service, and the level of cost is lower if customers are happy, and renew their contracts.
- Manage regulatory obligations
Delivering regulatory obligations, whether in treating customers fairly or installing smart meters provides the opportunity to develop for the future. Financial obligations are complicated and need to be actively managed.
- Develop for the future
The industry is changing, and new technology is becoming more and more important. Customer products and services will develop beyond the traditional, and suppliers look set to lose the 1:1 relationship between them and each customers’ meter. Being ready to support new products, and service customers growing needs will be critical in the long run.
Cielo Energy provides independent support to suppliers in managing their commercial opportunities and risks. We provide short- and long-term support, to provide everything from a quick health check to more detailed projects and ongoing support; making it a cost effective solution to optimising your business.
Whether it is managing your existing portfolio, designing a new product, or looking for a new system we can provide support and work with you to deliver your objectives.
Here you can find our quick reference guide to assessing your energy cost structure. It has been created to assess the level of exposure in each area, although your company specific focus and contract structure will influence things. Doubtless you already have resources dedicated to managing this, but in our experience independent reviews often produce the potential for marginal gains. I would be happy to talk through this or any other energy related matter with you through an introductory no obligation discussion.
Each element of the energy cost stack has its own nuances and complexities. For suppliers, the reality is that they stand at the end of the industry value chain, and absorb many of the volatilities created through the generation and supply infrastructure charging structures.
Cielo Energy can provide support to your business to optimise its commercial positioning.
Call us on 0333 242 3273.