The rise of the energy independents

In recent years there has been a proliferation in the number of independent energy providers entering the market and taking on the ‘Big Six’. One of the latest companies to enter the market is Pure Planet, which launched in May, offering customers 100% renewable energy. Environment Journal spoke to the company’s co-founder, Steven Day about the changing face of the energy market and why the days of the Big Six might be numbered. 

Over the past couple of years, a number of smaller, independent energy companies – like yourselves – have entered the market. What were the reasons for Pure Planet going into business?

Pure Planet started with a question – can we offer renewable power for less than polluting power? When we looked at the retail energy market, renewables were being sold at a premium, sometimes 15-20% more than the average market price. It meant only the people with money could afford to do the right thing.

The founding team behind Pure Planet came from the telcomms industry, where we founded Virgin Mobile, ran Orange and T-Mobile, and created EE. Virgin is famous for taking a market, turning it on its head and putting a little twist into it. So, we had a bit of a Virgin-type thought – can we make renewable 20% cheaper than polluting power? We said, we’ve done it at Virgin, we’ll do it again.

The challenge was to come up with a new business model, which would make renewable energy affordable and easy to manage for everyone. The obvious answer to that was to embrace the technology that people are now using in their everyday lives.

By basing Pure Planet around mobile and smart digital tech, we realised we could cut out a lot of the rubbish that still goes on with energy companies who haven’t kept up with people’s lives. You don’t have to sift through months of paper bills or wait for hours in a call centre queue. Managing your energy can be done just like managing your diary, in an app, on your phone in a matter of seconds.

Once we realised the potential to make people’s experience easier, more affordable and more modern we really began to get excited.

As a personal ambition of the founders, we also started Pure Planet to help the environment. We don’t see why powering people’s homes should pollute the air that we all breathe, or cause needless global warming – we feel quite strongly about that. Renewables are cheaper – so why would you pay more to harm the environment?

What do you think smaller operators can offer customers that larger suppliers cannot?

As a smaller business, and newcomers to the industry, we’ve got perspective, which the monolithic Big Six providers simply don’t have. From the outside, we looked at an industry which is massively driven by price, and yet Big Six prices are so high that politicians want caps, and trust is so low that the biggest players in the market have some of the worst customer approval ratings.

Small providers offer lower prices, better customer service and some, such as Pure Planet, offer a resolute commitment to renewables too. With their track record, the bigger companies have lost the moral authority with consumers to seriously advocate for any of these things.

With the bigger companies, they’re so wed to their outdated way of dealing with customers that there is often a legacy of inconvenience. When we say we’re committed to making managing your energy a breeze, it should be easy.

Ultimately, the rise of small companies with new ideas means consumers now have a very real choice.

In the case of Pure Planet, it’s a very clear: either you pay more than you have to for energy which is polluting, or you choose to pay less for renewables. Why would you pay more for dirty when you can pay less for clean?

How can smaller firms promote the use of renewable energy?

The first thing they can do is make it affordable, as we have at Pure Planet. There are several companies offering renewables now, but some of them charge a premium.

We all want a world in which we don’t have energy companies treating the atmosphere like an open sewer, but to help people choose another way the driver must be price. That means getting rid of the misconception that green energy costs more than brown. It doesn’t, and there’s no reason why people should have to pay more for it.

The other thing that energy companies can do better is to show their customers where their energy comes from. We’re working on being able to show our members the provenance of their energy. Once people see that they can either effectively fill their homes with clean, fresh sunshine, or some mucky fossil-based power instead, the case for renewables will be even stronger.

With so many independent suppliers in the market, are the days of the ‘Big Six’ numbered?

In a word, yes.

Although the number of people switching energy provider is on the rise, there are still millions who have never switched. What can be done to engage them more?

The first thing the government could do is step up and provide real education on switching energy suppliers.

With Pure Planet you can switch in under 60 seconds, yet there is still a significant number of people who think that switching supplier is difficult and complex. It isn’t. Too many people still think their lights will go out half way through a switch if they miss a letter or a phone call.

The government knows that switching saves everybody money, so if they’re serious about looking out for people’s financial interests they need to stop messing about with trying to devise complex policies and engineering price caps. They should boost consumer education and explain how easy it is to get a much better deal. A hard-hitting campaign is the easiest, fastest way to promote savings.

People are already leaving the Big Six in droves – but too many have yet to switch and save.

Are there any other social benefits, other than cheaper prices, which smaller operators can offer?

There’s plenty that smaller companies can do, and frankly should do, if they’re serious about things like renewables and sustainability.

The industry has to keep its finger on the pulse of smart tech, zero emissions transport, battery storage, all of the things which are going to be part of people’s lives as we move toward a more carbon-neutral future.

One of the things we’re proud of is the fact that we offer energy with zero mark-up, which means we can have an honest conversation with our members about using less energy, because unlike others we’re not depending on their energy usage to drive our income. It’s better for everyone.

And finally, there is a lot of talk about the government bringing in an energy price cap. What are your thoughts on the matter?

We just don’t need to do it. From an economic point of view there is already a big incentive for newcomers to the market to undercut the Big Six, and that’s what’s happening.

The politicians talked of an energy cap at around £1,100. In London we’re already more than £200 cheaper than that for an average household, so we just don’t see the point. The government also wants a free market. With a dynamic market, new and innovative companies with bright ideas help drive down prices, improve service and provide more choice.

We need education, not intervention. The government needs to reassure people that switching is quick, easy and safe. Theresa May recently spoke about a magic money tree – she said it doesn’t exist. Well, it does. For millions of householders, there’s a couple of hundred pounds ready to be picked up by the Big Six’s customers.

Once they forget about price caps, it would be a big improvement if we also heard some serious talk about cutting our country’s carbon footprint. Backing the renewables industry would go a long way towards helping with that.

Photo by Larry Smith2010