If you’re buying the amount of energy Google does in order to power its vast system of data centres, along with offices housing 60,000 employees, then energy producers are going to pick up your calls and make a deal with you. The same goes for other massive companies like, for example, Ikea, Mars and HP, which are also heading in this direction. They can work directly with wind and solar farms to make their own deals.
Nice for them. But if you're running a hairdresser in Northampton, or a bakery in Leeds, or a small business in Dorking then it’s not so easy to lift the phone and have your needs immediately met in a direct relationship with energy generators. In fact, up until very recently, it was impossible.
I’ve always thought this state of affairs was completely unfair. Why shouldn’t customers have energy products designed with what they need in mind? In my almost 30 years experience in the energy industry, one thing I have learned above all else is that the ‘Big Six’ energy suppliers don’t put customer interests first when developing products, that would make customers’ lives easier or make the market more transparent. They design products with themselves in mind, rather than their customers.
It’s my frustration at the Big Six’s intransigence in this respect that has driven the businesses I have created and run throughout my career, including Squeaky. Back in the 2000s, I was CEO of energy technology business, Utilyx, and a huge supermarket chain came to us, exasperated that they were forced to buy energy at retail prices. Their argument was they bought everything else at wholesale prices, so why should they not be able to do the same with energy? The answer was, the market just doesn’t work like that - or it didn’t then.
We set about changing that and worked out how to design contracts that would enable this to happen. We set up a web-based marketplace, very high-tech at the time and the first in Europe, where suppliers would bid for contracts with big corporations. None of the Big Six wanted to take part, we were the irritating new kids on the block, but we were soon working with big businesses like Tesco, Vodafone, Barclays and Boots, which all said if the suppliers didn’t join the marketplace then they would not win their business. Within two years the Big Six had all joined. Similar systems are now used all over the world. The point of that story is not that we performed some kind of miracle but just that we were simply willing to design products based on understanding customers needs and always putting that front and centre.
Our aim with Squeaky is to do the same for growing businesses - deliver products and services designed around their needs and wants.
The Big Six suppliers mostly haven’t even offered a renewable energy tariff to small businesses because, since they are primarily fossil fuel generators, it is actually logistically very difficult for them to allocate renewable power from specific producers to individual customers. Other specialist suppliers have offered renewable energy but only with a price premium. And by the way, some of what’s on offer, for instance biomass, is not all that clean or renewable in any case. [link to clean energy blog]
The energy market has been something of a nightmare for small businesses for years. Contracts are opaque, to say the least, and margins can be as much as double those in the domestic sector and then some unscrupulous brokers add even more than the supplier does. Understanding and negotiating contracts has been mind-bendingly awkward – and what growing business has the time to wade through it all anyway?
A recent report by the Competition & Markets Authority found that small and medium-sized enterprises are losing £500m a year on overpriced contracts.
A recent report by the Competition & Markets Authority found that small and medium-sized enterprises are losing £500m a year on overpriced contracts. They are overpriced because much of that margin, which is typically between 20% and 50% depending on the size of the transaction, is eaten up by intermediaries, credit costs, trading costs, and ‘legacy’ industry costs, including outdated, cumbersome systems and processes. No one in their right mind would want all those costs factored in to their energy contract, Google certainly didn't and why should you?
Just as we did with Utilyx for big businesses, we are doing with Squeaky for growing businesses. It is driven by a similar motivation - I don’t like how the market works, I like thinking about what customers actually want and figuring out how to deliver it. My experience in setting up Utilyx taught me that if you want to bring innovation to energy supply you have to do it yourself as the Big Six are happy with the status quo.
So we’re tackling both of the big issues – direct access and price - at the same time.
So we’re tackling both of the big issues – direct access and price - at the same time. The rapid growth of independent renewable generators, driven by the falling cost of wind and solar energy, now makes a platform like Squeaky possible. Over the past year, we’ve secured access to 10% of the UK’s renewable energy capacity – enough electricity to power 100,000 small businesses. Fifteen years ago, we couldn’t have done this because back then, 50 fossil fuel power stations supplied nearly all of the UK’s energy needs and these were largely owned by the Big 6. But now, there are several thousand distributed generators and this has created the building blocks for a genuine marketplace in renewable energy in the UK.
Giving small businesses the choice to switch to clean energy in the same way mighty companies like Google are doing is Squeaky’s mission and is underpinned with deep industry knowledge.
Giving small businesses the choice to switch to clean energy in the same way mighty companies like Google are doing is Squeaky’s mission and is underpinned with deep industry knowledge. The painstaking creation of a network of wind and solar farms (so that supply is guaranteed) and securing the support of Europe’s largest renewable generator (so everyone is protected) does not happen without the benefit of a complete understanding of the challenges in the complex energy sector.
So now, you can do exactly what Google has done and form a direct relationship with renewable energy producers. You can cut out the middlemen and all their associated costs. You can even choose precisely with which wind farm or solar farm you want to do business. There will be one in your region and your growing business can be part of a thriving scene that also supports social projects in your area.
Yes, Squeaky has a disruptive business model - we’ve turned something that only big companies could get into something smaller, growing companies can get. It comes from a lifetime of listening to customers, listening to what their needs are and designing products that meet those needs.