Utility Week

UTILITY WEEK | JULY 2021 | 27 Customers Interview in association with A sk Ed Kamm, chief executive of Shell Energy Retail, to describe the state of the energy sector today, and you're le in no doubt of the challenge it's facing. "The whole energy system is in the midst of a mas- sive transformation," he says. "We have a system that was built for carbon-based fuels, but we now need to move to net zero. And we can't underestimate the level of disruption and transformation that's required." If transitioning to net zero is challenging, so is just standing still. "The retail sector is not strong," says Kamm, who was a director of First Utility when Shell acquired it in February 2018 with its 825,000 custom- ers, pointing to collective losses across the industry of £1 billion during 2019/20 and a reduction from over 70 suppliers to 46. He adds witheringly: "We're the only industry I know that when a supplier fails, the rest of the industry picks up the cost. So how does the market become economically viable as well as renewable and sustainable? And where does Shell Energy see its place in the coming years of transition and beyond? "Our strategy is to create green energy solutions and systems that are built around the customer. The industry was built to consume carbon- based fuels but it's going to look very different when it's focused on consuming renewable fuels. "The large majority of the cost in carbon-based fuels was the commodity – for example, burning oil or coal or gas to create electricity. With renewables, it's the asset cost to build a wind farm or a solar plant. The commod- ity cost is next to zero because wind and sun are free. "When it's going great, you're producing a lot of energy." How much of Shell's growth will be in the UK depends on what the different regulatory and govern- mental frameworks look like around the world. "We don't know how the next 10 years will play out. But we're aiming for 15 million customers globally, both businesses and domestic customers." To reach its targets, Shell is increasingly moving into renewable generation, with new offshore wind farm investments and strategic acquisitions. "One of the key things is the overall system-wide optimisation, and the integration and juxtaposition between flexible assets, like wind and solar. But it's also about flexible demand. "How do we make sure that when excess wind is blowing, we're using that to charge electric vehicles, and when it's very expensive, we're not charging, unless it's absolutely critical?" This conundrum plays to Shell's strengths, he says. "The critical thing is that in the old world, you could only fill up at a petrol station. In the new world, you've got multiple different assets to charge your vehicle. It will be all about letting the consumer choose what's best for them, but giving them the options in a very con- venient way." Shell is aiming to operate half a million electric vehicle charging points globally by 2025 and as many as 2.5 million by 2030. One of the new sectors for acquisition is in broad- band, where a deal to buy the Post Office's broadband has delivered 450,000 customers. The rationale? "I think broadband has become the fourth utility. Many customers are very dependent on it, and connectivity is becoming increasingly important. Owning a broad- band business allows us to develop integrated digitally oriented solutions for our customers." It's a central part of Shell's strategy of integrating the system, all the way through from generation to demand. Says Kamm: "In the past, it was very easy to just be in generation, or networks, or retail. But it'll be increasingly important to be in multiple parts of that value chain, and bring those solutions together for customers." Undoubtedly challenging, but Kamm is excited about the prospects. "There are huge opportunities ahead. New business models will develop. We'll be able to drive real consumer value in a way it was difficult for energy retailers of old to do. We'll move away from energy sup- ply and move into much more renewable and energy solutions, built around the customer." To read the full interview, download the report free at: https://utilityweek.co.uk/remaking-energy-retail-major- new-report/ "There are huge opportunities ahead. New business models will develop. We'll be able to drive real consumer value in a way it was difficult for energy retailers of old to do."

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