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Why We Need Innovation in the UK Energy Services Market

Earlier this month, Verdantix hosted an energy event in London, attended by over 100 leaders in the sector. A major focus was the theme of innovation: by start-ups and large companies, across technology, partnerships, financing and business models.

So why do we need innovation in the UK energy services market? Verdantix thinks two recent news announcements and some themes from our event show exactly what’s driving the need for innovative solutions.

The latest Ofgem data show switching rates were up by 15% year-on-year in 2015, with 6 million customers moving energy supplier. There is great concern from Big Six utilities around declining customer bases due to the growing number of new entrants in the supply market. Large utilities are therefore turning to technology innovations (such as customer engagement software and connected home services) as they look at ways of retaining their customer base. The latest trend has been for large utilities to offer residential customers digital devices to improve and differentiate their offerings – witness SSE offering Tado smart thermostats, npower providing Nest thermostats and British Gas offering a broad range of Hive smart home gadgets.

In a different part of the market, developments in technology have been supporting the evolution of the boiler room into more integrated energy centres (comprised of CHP, boiler and thermal storage). Lots of end-users have been getting interested – from universities and hospitals upgrading aging boiler houses, through to new housing and mixed-use developments using energy centres as part of heat networks. This February, SSE announced a large energy centre project at the new Riverlight housing development in London, and Vital Energi closed two separate deals to install CHP-powered energy centres into mixed-use developments as part of heat networks.

Finally, a theme at our energy event is that technology is enabling energy management to be rolled out at scale. In particular, repeatable and scalable technology can help to can drive energy reductions across a global estate. For example Barclays rolled out a remote building control system across the majority of its building portfolio, which helped Barclays achieve a 30% reduction in global energy usage in August 2015 compared to 2012.

So in a market that is now mature in many ways, market participants are looking at how to take advantage of innovative technologies. Look out for our upcoming report, where we will highlight the Most Exciting Energy Innovation Projects In 2016.