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Three key themes taking place in the TPI sector

Molly  Lloyd Molly Lloyd Analyst
20th May 2020

While discussion continues around the impacts of COVID-19 on energy suppliers, the effects have reached into all parts of the energy value chain. Here, we take a look at the impacts on the TPI sector, alongside other key developments in the TPI market, highlighted in our second quarterly update of the Third Party Intermediaries in the Business and Industrial Energy Supply markets report.

One: Challenges faced in the industry caused by COVID-19

This quarter saw GB thrust into lockdown due to COVID-19, creating a level of uncertainty in the energy industry that has not been seen since the 2008 financial crash. At this time, the role of TPIs has never been more important, as they seek to inform and explain to customers the changes as they occur, fulfilling their role as independent advisors. Demand for energy in the business market has reduced significantly, as certain sectors paused or closed their doors completely. Both energy suppliers and TPIs have seen the number of enquiries they receive from customers increase, with handling of these queries taking longer due to most employees working from home.

For some TPIs, the lockdown has decreased the number of new businesses they are able to secure contracts with, and the furloughing of energy decision makers in larger businesses has made completing existing contracts more difficult. Some suppliers have moved to focus on serving existing customers, while others are no longer looking to offer favourable terms to specific sectors that are more at risk.

Those TPIs that receive a proportion of their commission from suppliers upfront may also face challenges if suppliers look to claw back a proportion of the payment relating to overestimated volumes. If TPIs’ commissions relate to the volume of energy used by the customer, then the impacts of the reduced demand will be passed through to the TPI.

Two: Could PCWs provide price transparency in the business market?

Our quarterly update highlighted a growing discussion around transparent pricing for smaller businesses. It is widely acknowledged that prices offered by suppliers are difficult to compare, particularly for microbusinesses, leading to a proportion of these businesses not identifying the best deals.

One solution put forward by the sector has been the introduction of price comparison websites (PCWs). PCWs have already been successful in the domestic market, providing efficient and transparent transactional switches for small volumes. As more of these websites emerge targeting the non-domestic sector, TPIs too have developed their own sites alongside their core businesses, acting as a separate revenue stream.

This method of switching could facilitate a greater number of business switches in the future. In many cases, PCWs may be able to target businesses that have so far remained fairly disengaged from the energy market, providing a simple transactional switch.

Three: Cornwall Insight’s updated TPI Index

Our latest Cornwall Insight TPI Index, published in conjunction with the quarterly update, shortlisted 150 SME TPIs and 107 I&C TPIs. Figures 1 and 2 highlight the leading TPIs in these Indexes. Bionic and Love Energy Savings continue to lead the SME TPI market due to the large number of contracts that they both negotiate. The number of TPIs in joint third place increased as Online Direct saw its employee index increase and therefore, joined Great Annual Savings, Northern Gas & Power, Smarter Business and Utility Alliance in that position. Inspired Energy continued to lead in the I&C TPI market. Majestic Securities Group joined NUS Consulting and Schneider Electric in joint third as it saw an increase to its contracts index.

About Third Party Intermediaries in the Business and Industrial Energy Supply Markets

Third Party Intermediaries in the Business and Industrial Energy Supply Markets maps the business energy supply markets and the role of TPIs in them. It is a subscription service including an annual baseline report and quarterly updates. It also profiles over 200 TPIs and ranks them using the Cornwall Insight Indexes for SME and I&C sectors.

If you are interested in subscribing to our TPI report, please contact m.lloyd@cornwall-insight.com