Good Energy pushes forward with transition to green lifestyle brand in bid to stand out from Big Six suppliers
Good Energy is pushing forward with its transition from an energy supplier to a wider green lifestyle company, with boss Nigel Pocklington arguing that “heavy differentiation” is a clear route to survival in a market increasingly consumed by the Big Six energy firms.
He told City A.M.: “If we return to a cosy oligopoly, then we risk returning to a cosy oligopoly level of service and pricing. So, I do think challenger propositions can survive – but they have to be well run and we need to learn our lessons of the energy crisis. Size isn’t everything in this and our focus on deep green consumers and the installation and maintenance of green technologies is giving us a different and differentiated position.”
Following Octopus’ takeover of Bulb, around 90 per cent of the market is in the hands of six suppliers again – giving less room to challenger offerings.
However, Good Energy is looking to stand out from the crowd with its shift from being purely a supplier to a green lifestyle group – helping people transition to net zero and decarbonise their homes.
Pocklington describes this as being a “supply plus” company.
To this end, the supplier invested nearly £5m in electric vehicle mapping service Zap Map last year, and snapped up the heat pump and solar installation business Igloo Works three months ago.
The supplier is now pushing to ramp up smart meter installations – adding 13,000 to its customer base over the past 12 months – which make up 47 per cent of its customer’s meter points.
It also recently launched a smart export tariff for households with solar panels in March 2023, and has begun installing its own solar panels for customers.
Good Energy is currently home to 250,000 customers, but Pocklington predicts there are as many four million households motivated to make their homes greener.
This will give the company space to pursue a wider package of products even if other firms come up with similar proposals.
Pocklington is also in talks with multiple companies over ‘solar plus storage’, which it wants to add to its offering.
He said: “There’s a solar surge on, and we need to add to capacity. We are in active discussions around M&A with solar installers and solar and battery installers – so we can bolster that side of our business.”
Good Energy suffers slash in profit margins
His comments come as the FTSE AIM All-Share company announced its full year results, and shareholders are seemingly backing its transition plans – with the company enjoying a 12.7 per cent boost on the London Stock Exchange this morning.
This is despite the company’s profit margins being slashed by soaring wholesale costs, with higher prices for households not keeping pace with last year’s spike in gas prices.
The challenger supplier has reported a 10.7 per cent increase in gross profits in its full-year results, with earnings rising from £27m to £29.1m over the 12-month period.
However, the gross profit margin has fallen from 18 per cent to 12.5 per cent – reflecting the scale of the crisis facing the energy sector, with higher than ever household bills not enough to offset soaring wholesale costs.
Wholesale costs have also driven revenues, however, which have risen 70.3 per cent to £248.7m – up from £146m in 2021 – which have powered price rises throughout the year.
Overall, the supplier has reported a profit before tax of £8.5m (compared to £1.8m last year), including net £4.9m recognised value on its investment in Zap Map – the electric vehicle mapping service.
Commenting on the results, Pocklington said: “We have made significant strides in delivering on our strategy to become a leader in green energy services, and this momentum has continued with strategic milestones already achieved in the first quarter of 2023.
“There is a potential £5bn to £10bn growth market in clean energy technology installations among climate conscious customers. We are ideally positioned for this, and are kitting homes out homes with solar panels and batteries now and plan to install 12,000 heat pumps by 2026.”