How To Build Win-Win Partnerships In The Energy Sector Impact4All Great partnerships

How To Build Win-Win Partnerships In The Energy Sector

Partnerships can help with increasing sales, innovation, raising finance and reducing costs in the energy and cleantech sectors.

Great partnerships are vital for helping businesses succeed, writes Dr Neil Williams

Partnerships can help with increasing sales, innovation, raising finance and reducing costs in the energy and cleantech sectors. The first section of the Business Model Canvas is key partnerships because for businesses – large or small, young or old – there is no such thing as end-to-end or “we can do it all”.

Every partnership has different commercial factors and nuances. Some may be more tactical than strategic. They are often asymmetrical, e.g. a small consultancy may consider its relationship with Microsoft as strategic but not vice versa.

Vignettes

With EV charging networks, a large part of the land grab has been about winning the support of points of traveler interest, along with getting published in popular online maps. Chargemaster executed this at national scale by leveraging a number of strategic partnerships. They have been rewarded with a £130M acquisition by BP.

Uniti EV has done a fantastic job partnering with MediaMarkt – Europe’s largest retailer of consumer electronics. From 8 December 2017​, Uniti vehicles have been available to view and pre-order in stores. These partners are teaming up to disrupt car distribution.

Utility Warehouse has built a franchise network to proliferate its business model and grow market share. Through very generous “refer a friend” offers, fast growing supplier Bulb Energy has inspired its customers to evangelise its value proposition and behave as a very effective distribution channel partner.

With platforms like Apple’s HomeKit or Google’s Android Things, independent software developers can leverage APIs to transform these innovations’ features into benefits for consumers. It is also clear that smart home technology and energy supply is a fertile ground for partnerships.

The Energy Web Foundation is a promising example of an open source partnership. Operating in the distributed ledger (aka blockchain) space, they are creating shared infrastructure for solutions that accelerate the transition to a decentralised and democratised energy system.

Software vendors (e.g. Gentrack, AMT-Sybex, Utiligroup) have partner ecosystems which reinforce their products by empowering others to add customer engagement and analytics features via APIs and micro services. Open Utility is proving that its software can be a vital component of future distribution networks through partnership deals with BEISUKPN and SSEN.

Collaboration across the value chain

From R&D through sales to customer service, partnerships and collaboration can help small players punch above their weight and help larger organisations operate in markets where speed and agility is key.

Outsourcing

Outsourcing can optimise operations and enable a focus on core activity. These are often viewed as partnerships but are more often tactical buyer-supplier relationships than strategic alliances. Therefore, they are not considered in this short article.

Investment

Dealing with investors, as with any partnership, requires patience and mindfulness. Terms like dragons, tigers, sharks, lions and vultures paint a popular misconception of investors as hard-nosed, aggressive capitalists.

However if approached right, most investors are valuable sources of constructive criticism regardless of whether they are in or out. In dealing with investors as partners, it is important understand their view of the world.

Innovating with partners

Over the last 50 years, R&D in the energy industry has only added up to a percentage point or two of turnover. However this amounts to billions and certainly should not be treated as being immaterial.

For the past decade or so, almost every other sector has been going through wave after wave of innovation. In particular, the energy sector is ripe for transformation and is reframing its approach to innovation.

Partnerships can help position firms to catch the next wave of innovation can help in establishing systematic approaches to getting value out of new technology, business models and markets.

Incubators, joint ventures, alliances and consortia for developing new products, services and software are becoming more and more prevalent. For example, IdeaLondonEIC, KTN and others are doing some great work in the UK.

Distribution

Distribution deals are a common way to increase sales. Sometimes they are agent/principal relationships rather than strategic partnerships.

In these relationships there are two key protagonists: the Owner and the Provider. The former holds the ultimate customer relationship and brand. The latter provides a channel to market.

Distribution Network Operators (DNOs) offer a delivery mechanism rather than a channel to market. There are mandatory Buyer-Supplier relationship between a licensed energy retailers and DNOs rather than strategic alliances.

Whitelabel energy supply are classic distribution deals. For example, British Gas offers products and services under the Sainsbury’s Energy brand, while SSE works with Marks & Spencer to provide M&S Energy. Even with Ofgem clarifying its position on the regulatory treatment of these types of deals, it is not all a bed of roses. In 2016 Age UK was criticised roundly after over its relationship with E.ON.

Digital partnerships

In digital markets partnerships embodied as APIs, microservices, open data and platforms are proving to be critical for the success of many businesses. Within the energy and home services space, many entrepreneurs see a future where customers can access the information they need and interact wherever is most convenient for them. This might mean viewing bills through a digital banking app, or managing council tax bills through a WhatsApp bot. This is a natural way for digital natives to interact. To achieve this, platforms and APIs are needed behind-the-scenes to glue it all together.

There are many APIs and data sets for energy industry software engineers to leverage. However, developers moving in from other sectors find interfaces within the energy industry are not as modern, useful, findable or as open as in other sectors.

To date the energy industry has no major digital platform offering like we see from Amazon in retail, Apple in music or Uber in transport. But there may well be one just around the corner. Don’t forget that the decline of BlackBerry and Nokia was due to competition from Apple and Google who are platform companies.

Conclusions

Trust is possibly the most important cultural requirement for strong partnerships. Trust can be readily achieved through having open minds, open hearts and open will.

Other key ingredients in most successful partnerships are a good understanding of partnership eco-systems and a long term, strategic mindset.

Before partnering you should:

  1. Know the market you’re entering
  2. Know your own strengths and weaknesses
  3. Understand how a partner can amplify your strengths, cover your weaknesses or help produce something entirely new
  4. Be realistic

Don’t hesitate to seek the advice of specialist consultants and your peers in other industries. Unsurprisingly people who have been successful in forming strong partnerships are usually open, approachable and happy to share there knowledge and expertise.

About Neil Williams

Dr Neil Williams is the founder of UK-based smart energy professional services provider, Tilix. The firm helps new entrants to the market to meet stringent requirements and deploy smart energy solutions. Williams is also the founder of the Tilix Angel Syndicate, which invests in and advises clean tech start ups.

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