Enel CEO: Europe Needs a Single Energy Market
Enel CEO Francesco Starace has spoken out in favor of a single energy market in Europe, stating that it would bolster investment and facilitate a move away from reliance on Russia. He went on to say that the European Union (EU) faces ‘structural’ issues within its energy sector owing to the fact that member states act alone rather than as a collective. He noted that diversification is not the problem, but rather the lack of a coherent policy, which stifles the continent’s ability to reap benefits.
“Each single state had its own different policy, its own different view of markets. As a result of all this what we have in Europe is a great diversification which is one of the best things to have,” Starace told CNBC in a TV interview.
“The only thing is we can't use this diversification because we have single markets that don't allow this diversification to bear fruit. So I think the real thing we need in Europe is a single market for energy. That will let this diversification come to the surface,” he said.
Reliance on Russian Gas Scrutinized
Europe’s energy policy has been under close scrutiny since the Ukraine crisis when a reliance on Russian gas generation came to the fore. The EU relies on Russia for around 30 percent of its gas requirements, which are piped through Ukraine. While the continent has not felt a dramatic impact from the geopolitical tensions, the potential for knock-on effects was highlighted when Russia turned off the gas to Ukraine earlier this month over payment issues.
Europe, unlike the U.S. has not pushed ahead with other means of gas extraction such as fracking owing to controversy and fierce opposition from campaigners, but has rather turned its attention to green energy, aiming for a 30 percent cut in energy usage and 40 percent in greenhouse gases by 2013. Critics of the targets say renewable energy is too expensive and not sustainable due to the fact it is often funded through government subsidies.
Starace said that the EU needs to agree on a unified energy policy soon or risk much-needed investment in the sector.
“I think you have to separate Europe and the rest of the world. In Europe everyone is waiting for these decisions, what kind of environment do we need…what kind of market? Until this is cleared it is mistake to really push big investments,” he said.
Technology revolution for water retailers
In April 2017, the UK’s water retail market in the world opened for business – the single biggest change to the water sector since privatisation. This development allowed businesses, charities and public sector organisations to shop around for the best deal.
However, like any industry, this change hasn’t been without its sticking points; here, Paul Williams, CTO at Everflow Tech (pictured far right), discusses how retailers can harness technology to their advantage
Quotations could take up to a week to produce, billing software had to be manually updated and brokers were unable to manage the complete customer journey in one place – all of which took time, cost money and allowed for human error.
The more complexity that was involved in billing or quoting, the more contact end customers needed to have with their retailers, pushing up the cost to serve for every SPID. This meant retailers – ourselves included – found themselves in a situation where profits were simply eaten up by service costs.
We also note that it can traditionally be hard for retailers to stay on top of balancing what they are charging their customers with what they are being charged by the market. To further exacerbate this, the longer a change goes unnoticed, the more trouble it can be to balance the issue.
It was these issues that Josh and his (at the time) small team wanted to ameliorate, creating their own technology in the absence of anything else.
This technology evolved into our award-winning retail sales, billing and customer management platform for the water retail market, and Everflow Tech was launched as a standalone venture in 2018, selling the software externally for other water retailers and their customers to benefit from.
What retailers want
As a relatively new entrant to the world of utilities competition, the water market could be seen to be lagging behind, particularly when it comes to innovation.
In fact, as recently as 2019, Ofwat said it expected the industry to be making technological advances and to be working with a culture of innovation, collaborating with companies both within and outside of the sector.
And with cost-savings for consumers traditionally lower than for other utilities, retailers need to be offering something more – whether that’s better support, energy-efficiency advice or more accurate data.
What’s more, consumers have had a taste of the power of technology, and they’ve come to expect nothing less from retailers across the board.
Another key issue – thrown into sharp relief during the past 12 months (and counting) of a pandemic – is rising levels of arrears, which are likely to increase bad debt beyond margins that retailers originally allowed for when the market was created.
In such a low-margin industry, there is a limit to the amount of debt retailers can take on, especially as recovering costs can be a very slow process. Ofwat has signalled that this issue could be addressed as early as this year, with a mechanism for recovering bad debt to be established during 2021/22.
The market needs simple solutions to better serve the end user, and we were perfectly placed to develop those solutions. At Everflow, our software is designed for the water retail market, by the water retail market.
As well as simple billing, clear-to-understand workflows, and a revenue assurance system to allow retailers to quickly compare market charges, Everflow has also introduced a complete debt solution, allowing missed payment dates to drive late payment charges and escalations automatically.
Retailers are able to design and put out their own bill and quotes, tailoring customer journey and overall experience – whatever the circumstances.
What does the future hold?
Automation is key to any industry; we’re heading into an age of driverless cars and smart homes, and this drive for tech will filter through to our industry, and we need to catch up.
The Internet of Things – a network of physical objects connected to each other – means human error (and effort) can effectively be removed from many everyday tasks, which goes for meter readings too. However, in the 21st century, the water market is still not leveraging previously emerged technology in the form of smart meters to provide accurate billing.
Consumers are also becoming more empowered, both to ask for information and change their preferences if they don’t like what they learn. Retailers need to be armed with this information, not next week, not tomorrow, but now – and, at Everflow Tech, we’re putting that information at their fingertips.
But the retailers themselves need to speak up too, and we will always work with them to get the best ideas on what needs to be developed and when.
Our strong bond with Everflow Water, along with other key customers, means we have a direct interest in making sure our systems serve the water market in the best way they can.
For us, the goal is to make sure retailers on our platform can grow as much as possible, leaving behind laborious daily processes to focus on their own strategic growth and, most importantly, helping their customers.