UK Water Market Deregulation: Is Your ESCO ready? [GUIDE]

As of 1st April 2017, the English water retail market will open up for businesses, charities and public sector bodies. It will be the biggest retail market for water services in the world. Plus, what better moment than World Water Day to understand what the UK water market deregulation is all about?

Most importantly – how can your ESCO leverage the opportunities hidden within these regulatory changes?

UK Water Market Deregulation: what’s going to change?

First things first: let’s understand what is changing with the British water market deregulation. Until now, you as a consumer or business in the UK were able to choose your electricity or gas provider, but not your water retailer.

That will change on 1st April 2017 thanks to the biggest restructuring of the British water market since the privatisation of companies almost 30 years ago!

But this is not the first change made in this direction. Scottish non-residential clients have been able to choose their water provider since 2008. What has changed in Scotland since then?

• 130,000 businesses were affected by the changes
• Scottish Water remained the sole Scottish wholesaler with complete control of water infrastructure
• New licensed providers now buy water services from SW to resell
• After the first 5 years, the program yielded +35 million pounds in energy savings
• Customer satisfaction with their water provider increased by 26%

Many analysts say that consumers can expect a similar market environment in England after the changes in April. It goes without saying that a big challenge lies ahead for the 20 utilities handling water distribution in the UK today.

One unchanging aspect to keep in mind is that the water regulator will still determine the prices private water companies can charge customers, based on a rather complex formula.

Opportunities for ESCOs After UK Water Market Deregulation

The most important thing to understand from the British water market deregulation situation is what’s in it for you, the busy and wise energy manager.

Apart from requests from consumers and businesses, who were asking for such changes a long time ago, the initial benefit will be your ability to search for a cheaper supplier. And, according to the Department for Environment, Food and Rural Affairs this change could deliver £200m in benefits to consumers and the UK economy at large.

Water deregulation is especially interesting for ESCOs because you have new opportunities:

• First, if lower prices start to appear on the market, you can offer a new service to your clients: water prices optimisation. Any addition to your services portfolio means retaining your clients longer.
• Secondly, you’ll likely find new clients. Why? Because small businesses are not ready for such changes, and many of them are woefully unaware! Don’t take it from us- see the numbers for yourself from a recent survey performed by UtilityWise (check it here). Plus, pumping and distributing water also consumes a gigantic amount of energy. Energy typically accounts for approximately 1/3 of the operating expenses of a municipal water agency, so look out for these types of new prospects!
• Other analysts say these changes could boost innovation in water conservation and consumption infrastructure. The technology spent on water is expected to jump to $25 billion USD by 2018 (a 67% increase compared to 2010). Any improvement in water distribution could mean more savings. And if the overall system becomes more efficient and generates savings, imagine what you can do for your clients!
• For larger ESCOs or medium-sized utilities this opens up a whole new market: offering water reselling services to clients.

Of course, if you’re working for a water utility in the UK now you can feel a huge disadvantage: more competition is coming to your market. Differentiating your offering and increasing flexibility is going to be key for you to survive.

What if you offer your industrial or businesses clients a complimentary energy monitoring platform with your service? We have been working with utilities in more than 34 countries and the results are clear: your clients stay longer with you if you’re able to offer them a compelling analytics solution within your services

3 Steps to Prepare Your ESCO for UK Water Market Deregulation

If you want to be ready to take advantage of any of the above-mentioned opportunities, your ESCO needs to take a few preemptive steps.

There are three things you need to check if you haven’t yet:

1. Still working with Excel?

If you’re still using Excel to track your client’s energy or water consumption, you are lagging behind the times and are sure to lose this opportunity.

Some sources, like water, have complex pricing and behaviour that is nearly impossible to track with a simple Excel file. Even if you are some kind of Excel wizard, then riddle me this: how much time do you spend on average tracking for each client?

If you spend more hours updating spreadsheets than giving wise recommendations to your clients, you will be able to invoice fewer services in the long run and up goes your churn rate.

Besides, aM&T software is cheaper than ever! Maybe even cheaper than Excel licenses for your entire company… And now energy management platforms do much more than just monitoring: M&V, cost and consumption forecasting, regressive analysis are all part of the energy analytics package you’ll get with an advanced platform.

2. Is Your aM&T Platform Ready for Water?

If you’re using an energy analytics platform that can only track electricity, it’s obvious that you won’t be able to do much with any deregulated water market business opportunities.

If this is your situation, this is the best time to migrate to a water-ready aM&T platform like DEXMA Platform. We have done migrations of entire datasets in less than 48 hours! To learn more, book a free consultation with one of our energy software consultants below:

3. Can you get data from any meter or data logger?

You might be happy with your current energy analytics platform, but, what will happen when you need to integrate new meters that track water usage?

If your aM&T software provider offers you a closed solution, it means you’ll only be able to work with a few select meters. To integrate new hardware or the datalogger you work with, you’ll need to pay an additional fee.

That’s why at DEXMA we worked hard to build a hardware-neutral platform. Hundreds of meters – including water fiscal meters – are already integrated at no extra cost to our users. 

And if yours is not there yet, you can use our open API to create your custom integration with your preferred developer.

To learn about more energy efficiency laws and regulations and how they can bring business benefits to your ESCO, download our latest free guide for energy managers: