Loading...

Services
About Us

Helping you make sense of the energy and water sectors

newsroom

Energy TPIs flow to water for business as energy market gets tough

Kate Hill Kate Hill Lead Analyst
15th December 2016
Energy TPIs flow to water for business as energy market gets tough

2016 has been another year of contrasting fortunes for business energy third party intermediaries (TPIs) according to Cornwall’s 2016-17 annual review of the sector. Innovation in propositions and routes to market continue to pay dividends as the market for negotiating energy contracts for businesses gets ever tougher.

The abrupt rebound in wholesale prices in the late spring made their deal-making tougher as they had to persuade businesses to sign up to higher energy bills. After two years of sliding prices, no more were there savings to be had, and some of the smaller suppliers who had driven energy competition all of a sudden found life much tougher.

The rebound in wholesale prices was a sobering reminder of how tough the TPIs’ core energy markets are. They have been stagnant in volume terms since the economic downturn of 2008. This stagnation has been acutely felt in the industrial and commercial (I&C) market, where TPI-on-TPI competition is intense and customers are becoming much more skilled in specifying the services they want. Average commissions are on the slide in this market. Consolidation remains the only consistent growth strategy in I&C.

In contrast, TPIs have continued to grow their share of contracts of the SME energy market significantly. Their share of the SME market has doubled since 2013 when we first started tracking the TPI market. Total gas and electricity SME contracts handled by TPIs pushed through the 0.5mn barrier for the first time, and year-on-year growth has again exceeded 20%. In contrast to I&C, SME commissions too have continued to rise. A critical change in attitude has seen most suppliers increasingly using TPIs as a renewal partner and a route to market to retain customers.

As technology evolves it is emerging that over the last year some of the larger I&C TPIs are starting to develop their services into areas such as demand side response. Another example of how TPI business models are adapting is in many companies’ preparations for the opening of the English water market to businesses in April 2017. While some TPIs see this as an opportunity to increase their revenue, others feel they have to enter into to save risking losing customers who want to use the same TPI for all their utility needs.

2016 TPI Report Press Release.pdf

This content is protected - Please login to access this information.

Login