Following a volatile 2018, which saw eight UK Energy Companies go bust, Economy Energy, which supplies approximately 235,000 domestic companies has also ceased trading in early January 2019. Economy Energy joins a growing list of small suppliers, including Spark Energy, Extra Energy, Future Energy, National Gas and Power, Iresa Energy, Gen4U, One Select, and Usio Energy, leaving in its wake a question of who will be next?
After a failed search for rescue funds to save the company in December, compounded with a threat from Ofgem about revoking their license, the small firm became the ninth company to go bust in twelve months. An increasingly volatile energy market is adding immense strain to small suppliers, and more casualties are to be expected. Rising wholesale prices, increased red-tape and tougher regulations, including the Government-enforced price cap on standard variable tariffs have hit suppliers hard, whilst the added pressure and uncertainty of Brexit is another unpredictable concern for traders.
In order to reduce the number of collapsing firms, energy watchdog Ofgem is updating a review of their testing of new suppliers to make it more difficult for new energy suppliers to enter the market. New entrants will be required to prove that they have adequate financial resources and can meet customer service standards. However, the inherent problems within the energy industry is suppliers failures to adapt, evolve, and innovate to meet today’s demands.
Currently, households have more than seventy energy suppliers to choose from, and many are ditching the ‘Big Six’ for cheaper, smaller suppliers who have lower running costs and better newcomer deals. However, this poses a great risk as smaller suppliers cannot buy as much power in advance, meaning they are vulnerable to sudden spikes in wholesale prices. Whilst this risk pays off for many customers, over half-a-million homes were affected by the collapse of the nine small name energy firms over recent months.
Adaption and innovation are fundamental to staying relevant and profitable in the unpredictable energy market, and the utilisation of new technologies such as Artificial Intelligence (AI) and automation, could be the answer to decreasing running costs, removing inefficiencies, and improving and optimising operations. Current archaic systems and processes, which are highly reliant on manual labour are costing suppliers time and money, directly impacting their operations. Innovation is key, if energy suppliers are to survive in the tough global energy markets.
Current processes within the energy markets use outdated software which is slow, lengthy, labour intensive, and inefficient in a fast-paced, dynamic environment. AI can work up to 100 times faster than the manual equivalent, whilst also removing the high probability of human error meaning that operations can run faster and more accurate, resulting in huge cost saving and time reductive repercussions, saving businesses from paying unnecessary excessive amounts of time and money on tasks.
Taking advantage of cutting-edge software pushes companies to refine and perfect their business model allowing them to excel and succeed in the difficult energy markets, by keeping them ahead of the curve. AI is able to prepare and forecast changes in the market, so more efficient and profitable decisions can be made, thus reducing the chance of unrepairable damage and losses that can be made due to current uninformed decision making.
A technological solution to the volatile and diminishing energy market is fundamental to succeed in a fast-changing energy market. Utilising AI and automated technology is the only way to guarantee that companies business models, strategies, and operations are equipped for the future. Future-proofing is key to ensure the sustainability of energy markets and firms by removing unnecessary risk from the equation and optimising operations by removing reliance on archaic business models and processes. For far too long the energy market has been complacent. It’s time for a change.