Almost everyone is aware of the recent energy issues in the UK (and elsewhere) in which prices have surged and there have been many casualties on the retail side. However, there are two sides to every story and higher prices are good news for some and, those on the generation side ought to be doing well. Yet, David Calmonson of Enegen told me this week when we caught up that market activity appeared to have slowed a bit in the last couple of months. “Strangely enough, the summer months were much more active in terms of opportunities,” he told me. Despite that, Enegen had a good first year of independent operation turning a healthy profit and David expects to close 3 or 4 more deals before year end and has a very full pipe of opportunities.
Interested in why a market with price volatility and record prices for a variety of energy and related commodities might slow down in terms of software procurement, we spent some time discussing this. “We simply haven’t had as much inbound in the last couple of months,” he told me. “Higher prices and volatilities mean that firms are busier than normal even those that are profiting. I see this in terms of both inbound inquiries but also with clients who we see are busier than usual.” Higher prices and volatilities are a two-edged sword it seems as one side of the market fights for survival and the other can barely keep up. Under such circumstances, software procurement likely does take a back seat – at least temporarily. However, David also points to the possibility that a potential temporary moratorium on new suppliers coming into the market on the part of OFGEM may also be partially to blame. Although potential generators can still use third-party suppliers to access the market temporarily or enter the Balancing Mechanism through the VLP role, it may be affecting some plans.
David remains bullish, however. He sees a full pipeline, and much interest in Enegen’s products like Genstar4 and Atom as well as a new product in development for Q1 2022 launch that he describes as “SaaS with sign up on the page by credit card offering a different dimension to what Enegen does already.” He isn’t ready to reveal much more but is excited about the broadening of Enegen’s product and services armory.
We also chatted a bit about procurement. As posted on these pages a few days ago, the migration from the old RFI/RFP process to a more trial-driven approach appears slow to pick up and we puzzled as to why. The RFP process is long-winded, expensive, and quite risky compared to conducting a different approach with demos, fact-finding and trials. This latter approach allows hands on experience with the solution and promises to aid smooth the implementation process as well. Since many solutions are now delivered as a service in the cloud, it is relatively easy to set up a paid or free trial. As David pointed out, an RFP costs several times the monthly usage fees for a solution anyway. We concluded that while there is some movement, centralized procurement departments still largely control the process. “We do see some evidence of a movement,” he told me, “But it is slower than you would expect.”