How to Start An Energy Company

Entering the retail energy market and starting an energy company is perhaps not as complicated as you might think. The proliferation of independent energy suppliers is a testament to how starting an energy company has become far more accessible. Here, we’ll investigate how to become an energy supplier, as well as the things you need in place to get your electricity and gas supply licence granted.

Getting your gas and electricity supply licence

A key requirement of starting an energy company is getting your gas and electricity supply licence. There are several key steps to gaining an electricity and gas supply licence that all independent energy suppliers must follow before they can enter the UK market. It can take around four months to be granted a gas supply licence, and up to 12 months for an electricity supply licence.

In addition to these requirements, Ofgem are on the verge of implementing additional licensing tests which will inspect the financial health of new businesses. Due to come into force in late spring 2019, these aim to ensure new suppliers starting an energy company have adequate funds to manage their business for 12 months post licensing.

 
Dyball Associates works in close connection with the regulatory and qualification boards, Ofgem, Elexon, MRASCo and Xoserve, to help our clients achieve the licensing requirements quickly and easily. When starting an energy company, we can provide direct one to one advice on gaining your licences; just get in touch to find out more.

Beyond the previously mentioned method of becoming a licenced energy supplier, there are a number of other routes to market. These include:

For new electricity suppliers, the licence Lite route can cut down the administration and timeframe to bring the new company to market. By partnering with an existing supplier within the industry for some of the more challenging aspects of how to start an energy supply company, new entrants can start trading faster and at a lower cost than if they sought their own electricity supply licence. More information is available in this Ofgem factsheet.

A white label company will use the infrastructure and resources of an established supplier to offer tariffs under their own brand. The existing licenced company retains contractual responsibilities with consumers, but the white label collects revenue from the tariffs they sell. For local authorities and community groups, this has proven a success in the past.

More information is available here .

A very small section of independent energy suppliers may be exempt from seeking licensing from Ofgem. An example is those who supply less than 5MW of energy, of which less than2.5MW is supplied to the domestic market. BIES will have the final say over whether an activity is exempt or not; further information can be found on their webpage .

Although the majority of new energy suppliers will endeavour to source their own electricity and gas supply licences, these other methods of entering the market are interesting food for thought. We’re happy to advise on any of these routes to market for new suppliers; talk to our expert team to find out more.

Entering the UK market is not a decision to be taken lightly. Aside from the requirements from Ofgem offsetting up an energy supply company, there are ongoing challenges such as the energy price cap and the highly competitive marketplace to contend with.

Regulatory requirements area constant strain on any new company, and many of those with poor pricing strategies and inefficient operations have already become market casualties over this winter. However, with a solid business plan and a sustainable revenue strategy, the UK energy market is still wide open for business.

Customer service is key to success, so it’s worth thinking about your energy supplier CRM system early on in the process. Our customer service management system (CSM) incorporates an energy billing system as well as integration with marketing messaging systems and PSR compliance tools, to make it easy to manage your customers in a professional, efficient manner.

Further Reading

Prepayment Meter vs Direct Debit: Which is Better?

Energy Price Forecast 2021: Covid-19, Brexit and much more

End of the 'Big Six' Energy Suppliers as the rise of challengers’ force Ofgem reclassification

For more information on creating your own energy supply company from scratch or any other aspect of how to start an energy supply company, get in touch with Dyball Associates today and we’ll be pleased to help.

Dyball Associates are proud to help new supply businesses successfully launch in the UK market.

Through our energy market consultancy services, and the software we’ve developed, we’re supporting new UK electricity and gas suppliers get set up and start supplying.

For more information on how to start and manage an energy company, get in touch with Dyball Associates today.