Energy Systems Catapult is working with a consortium of partners developing an innovative new approach to energy management and procurement for small and medium sized businesses (SMEs).
Led by Manchester firm, Q Energy, the project will utilise their QEnergyTM platform to enable SME customers to save on their energy bill by switching suppliers, reducing energy consumption with behavioural changes and investments in energy efficiency. They will also be exploring the use of battery storage and demand side management technology to respond to time-of-use tariffs.
To achieve net zero carbon emissions, we need to improve energy efficiency amongst the 5.7m small and medium-sized enterprises (SMEs) in the UK.
SMEs account for 99.9% of businesses in the UK and are responsible for over 55% of the energy used by industry. It’s well known that small and micro businesses are among those least engaged with the energy services market. Most businesses do not have the time or money to spend worrying about their energy consumption or efficiency. The Competition and Markets Authority found that the energy market is not best meeting the needs of the UK’s SMEs.
Energy efficiency measures can reduce bills and conserve energy in businesses, but further studies have shown the SMEs are not engaged in the opportunity, citing several barriers:
- SME engagement and access to information – focussing less so on energy and more on business-as-usual activities
- Lack of coordination between providers – energy efficiency providers’ offers are not clear, it’s hard to understand which measures are most appropriate
- High upfront capital costs – requiring large one-off payments
- SMEs do not tend to seek external finance
There is great potential for small businesses to improve the efficiency of the premises they occupy, and the market for energy service provision has an opportunity to join energy efficiency measures and installers with project finance in a tailored solution for SMEs. The Boosting Access for SMEs to Energy Efficiency (BASEE) competition aims to accelerate the growth of the energy services market for SMEs by driving down transaction costs and promoting third party investment in small-scale energy efficiency projects.
The QEnergyTM platform aggregates and utilises flexibility in consumer demand along with renewables & battery storage to enable localised trading and balancing, with the aim of building smart energy systems of the future.
Phase 2 is a collaboration between Q Energy, Energy Systems Catapult, Pure Leapfrog, Ask Inclusive Finance and Bryt Energy.
- Pure Leapfrog – community energy focused charity, will use this opportunity to further their social impact and environmental mission by exploring new markets for impact investment in energy efficiency for SMEs.
- Ask Inclusive Finance – their ambition is that every creditworthy start-up and SME in the UK are able to access the funding and help they need to achieve their full potential, supporting sustainability in the process.
- Bryt Energy – a business focused 100% focused renewable energy supplier, will support the project by providing tailored tariffs and a route to market for the QEnergyTM
- Energy Systems Catapult – using expertise in business modelling and consumer insight to ensure the solution is a success when launched to the marketplace in 2021.
Our Approach – Phase 1
In 2019, Q Energy was awarded Phase 1 BASEE funding to complete a feasibility study exploring the opportunity for their platform in the energy efficiency market.
In Phase 1, ESC’s Business Model Innovation and Consumer Insight teams supported the project by:
- Exploring and evaluating the feasibility of a range of possible business models.
- Identified key market segments where there is the highest potential for energy efficiency and cost reductions.
- Exploring the role of smart metering data to provide low cost insights and tailored recommendations for key market segments.
- Identified energy supply and demand shifting as key to reducing cost, and hence introduced Bryt Energy to the collaboration for the following phase.
Our Approach – Phase 2
Q Energy have since been awarded Phase 2 funding to develop and trial the service, with the goal of launching in 2021. The aim of the project is to develop and trial the Q Energy platform by integrating a number of functions – including energy switching, energy efficiency interventions and finance options. The consortium will trial the solution across 40 pilot sites later in 2020 with the office, retail and hospitality sector.
In Phase 2, Energy Systems Catapult is supporting the project with:
- Exploring customer needs in more depth through value proposition testing, user experience advice and user testing.
- Supporting the platform trial, including SME recruitment and analysis.
- Evaluate the validity of the business model based on the trial results.
- Build a long-term business plan and go-to-market strategy for the QEnergyTM platform to be rolled out to the SME market.
Businesses that utilise the solution will save money from their energy bill, and gain access to hard-to-reach information about energy efficiency measures. Q Energy make it easier for businesses to engage with and benefit from optimising their energy consumption.
Q Energy is also targeting non-domestic users that are not currently likely to have or see the value in smart meters. The growth of their service in the market supports suppliers’ smart meter obligations.
In support of the UK’s Net Zero target, carbon emissions savings will be demonstrated for each business, reducing the emissions associated with the traditionally inefficient non-domestic building stock.
Want to learn more?
Our Business Model Innovation team help design, evaluate and test new business models that will help transition the UK to net zero. We work with internal and external experts to help validate different approaches before testing in the real world. Talk to James Bagshaw about the project.
- Learn more about the Business Model Innovation team HERE.