Utility Week

4. WHO: A COMPANY THAT DOESN'T EXIST YET What's the deal: As technologies advance apace and the industry continues to fluctuate and advance, there are inevitably new ideas, concepts and business models just around the corner. It is believed these will have a disruptive impact. Why it matters: Utilities are on the cusp of great change, driven by climate, resilience, population growth and sustainability – particularly in urban areas. Market evolutions, meanwhile, mean there are opportunities to shape and reshape the utility arena with new business models, modes of competition and consumer interaction. Water, electricity and gas will always be essential, but the way the industry delivers them will change. In the retail space, for example, whole-house solutions are surely just around the corner, and with the continued growth of variable, low carbon and decentralised energy increasing the difficulties of managing the system, and the ingress of storage providing a potential solution, there is scope for new business models across the sector. 5. WHO: WATER RETAILERS What's the deal: As of April 1 2017, all businesses, charities and public-sector organisations in England, regardless of the amount of water they use, can now choose who provides their water and wastewater services. Businesses with multiple premises, or those using large amounts of water, may consider "self-supply", which requires a self-supply licence. Why it matters: A change in regulations surrounding the water industry may change water retailers' priorities, but the general consensus is that because they are driven by cost reduction, the sector is ripe for significant innovation in the years to come. Say what? "There are tariff changes that water u lity companies cannot pass on due to regulator pressure – the impact of this will be disrup ve." "Private water companies will come to the fore because of the pressures on 'regional' water companies." "Water companies have lost sight of their own purpose, and this will con nue to be increasingly disrup ve." – Survey respondents Water companies have lost sight of their own purpose 6. WHO: SMALL SUPPLIERS What's the deal: The rise of small energy suppliers has been one of the market's success stories. Ever since 2014 when the CMA opened an investigation into competition in the energy retail market, opportunist new ventures have capitalised on the distrust in the big six. In 2009, independents held just 0.2 per cent of the market. By 2010 it was still less than 1 per cent, but since then it has grown and their market share is now estimated to be between 13 and 15 per cent. Why it matters: Britain loves an underdog, and never has this been more apparent than in the media flurry surrounding the big six. As they continue to be maligned, the further rise of the small supplier seems all but inevitable, especially if they are given the power to wield significant influence. Furthermore, smaller, more nimble suppliers are arguably better positioned to deliver the innovation Ofgem says it wants. Already we've seen small players introduce differentiation in a stubbornly homogenous commodity. Green suppliers, tech-driven suppliers and local or council- owned companies have mixed up the market profile, introducing new perspectives on what energy can mean. These firms have challenged Ofgem's approach to regulation as much as they have challenged the big six. It's a dynamic Ofgem is attempting to embrace, developing "Innovation Link" and "Sandbox" to help new entrants make their disruptive ambitions a reality. I N A S S O C I A T I O N W I T H UTILITY WEEK | 26TH JANUARY - 1ST FEBRUARY 2018 | 13 I N A S S O C I A T I O N W I T H

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