How modern billing tech can help energy sellers with the energy crisis

 |  15 April 2024

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Aussie energy retailers have a lot to contend with. Of course, there’s the business challenges of balancing cost and profit, remaining relevant, operational efficiency, and so on. But there’s recently also been a perfect storm in Australia that’s placed significant pressure on the already stressed electricity retailing industry. It’s been labelled an energy crisis. Let’s break it down …

New market players

Between early 2020 and April 2022 there was an influx of new energy retailers entering the Australian market - one per month on average. This created significant competition and a flurry of customer movement between retailers. The need to innovate and create compelling, customer centric propositions and experiences became even more critical.


Surging wholesale energy costs

Wholesale energy costs in Australia averaged $87 per megawatt hour in the first three months of 2022, up 67% from the last quarter of 2021, and up 141% from the same period the year before. This was the highest the wholesale price had risen since the first half of 2019. There’s multiple reasons for this:

  1. The war in the Ukraine impacting supply and causing price surges. Many countries have been sourcing coal from other nations, such as Australia. Because of this, the demand for Australian coal has gone through the roof as local energy generators must compete with overseas buyers for coal.
  2. A number of Australian generators have failed or had outages, creating a shortfall in supply.  
  3. Increased demand, such as the weather and soaring temperatures driving up demand for energy.


Cost to serve became a significant issue

Most retailers are locked into price contracts to some degree with customers. Many of the newer retailers weren’t adequately hedged for wholesale pricing fluctuations, or even weren’t hedged at all, leaving them exposed when prices soared. This placed enormous pressure on removing operating costs, which for some energy retailers was still not enough to stay in business. Doors started closing and when this happened, it created a ROLA (retailer of last resort) event where customers were automatically transferred to the larger retailers, who were left to pick up the pieces. Unsurprisingly, just three new authorities have been granted since June 2022.

And on top of all these challenges:

Net zero and decarbonisation goals, and compliance ramp up

The development of new energy solutions like virtual power plants, power purchase agreements, solar and battery, and EV are all at the top of energy agendas around the world. And accompanying innovation comes new and more robust compliance obligations. But as we have talked about extensively, energy retailers are often hamstrung by outdated energy billing software, which is unable to support the new clean energy products and makes compliance difficult.

How billing software can support energy retailers faced with these challenges

Now, given we provide modern energy billing software we’d love to sit here and tell you that our software is the answer to all your problems. Of course, it can’t solve them all. However, it can help energy retailers run a tighter ship by enabling greater optimisation of operations, automation, accuracy, speed, and agility, which helps to reduce workload on employees and resolve resource and revenue leakage. In the current landscape (and indeed any landscape), this is not a small deal. Here’s a summary of modern energy billing software and how it adds value in the current climate:

  • Speed to market via unconstrained product development
    Where legacy billing platforms are typically constrained to specific product constructs, modern billing software offers unparalleled flexibility. It enables data to be harnessed in unlimited ways, providing a platform to bill any unit of energy, from any source, at any time. Very different to the way energy has traditionally been billed, and very relevant to the new energy economy.
  • Operational efficiency and accuracy with process automation
    Of course, one of the largest operational costs is human resources. Modern billing software can reduce employee workloads through automation of processes and workflows. Automation enables a shift to ‘management by exception’, which speeds up customer processes, increases accuracy, and reduces risk of revenue leakage. It also supports much faster pricing changes to cater for wholesale fluctuations, enabling energy sellers to pivot and adapt quickly as needed, or desired.
  • Space and flexibility to innovate
    With as many billing processes automated as possible, this frees up inhouse teams to concentrate on new revenue opportunities and decarbonisation solutions. And, with configurability at the heart of modern billing software, constraints with billing new propositions will become a thing of the past, creating an expedited innovation pipeline. 

Optimise, reduce risk, increase productivity and profitability

Whether the benefits of modern billing software provide a direct or indirect solution to the Australian energy crisis, one things for certain - running a tighter ship that has optimised, automated and accurate processes and workflows, reduced stress on human resources, and revenue protection is certainly going to help create a business that is prepared for whatever is coming down the energy pipeline of the future. 

If you’re thinking it’s time to make the switch to a modern billing platform, perhaps it’s time to speak to our team of energy experts about how Flux can add value.

Continue learning how we can help you

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