Dublin, Ireland and Helsinki, Finland — (METERING.COM) — May 20, 2010 – Between February 2009 and 2010, Irish utility company Bord Gáis Energy won nearly 21 percent of the occupied residential electricity market in the Republic of Ireland, setting a record for the percentage of residential customers in the market who were won over a 12 month period.
This is one of the findings in the VaasaETT Global Energy Think Tank’s forthcoming world energy retail market rankings report, which reviews switching activity in liberalized electricity and gas markets globally.
According to Dr Philip Lewis, CEO of VaasaETT, this is additional proof that there is no such thing as a safe customer for incumbent energy companies.
“Markets that are uncompetitive now, can become active very quickly if the conditions are right. In the coming few years we will see the same happening in other markets around Europe and elsewhere,” said Lewis.
The level of customer switching achieved by Bord Gáis Energy is attributed to price margins achieved through a combination of regulatory price controls placed on the incumbent as well as clever energy purchasing strategies by the company, the economic downturn in Ireland and outstanding marketing.
The significance of marketing in all of this should not be underplayed, Lewis added. “Energy companies typically fail to achieve sufficiently simple, clear and appealing campaigns. Energy may seem like a simple product to sell but few companies have ever managed to win many customers in this market.”
From earlier switching data, only five national markets have ever achieved a (calendar) yearly level of switching above 20 percent – the Australian markets of Victoria, Queensland and South Australia, and Great Britain and New Zealand. Prior to 2009, the highest national switch rate ever recorded for a 12 month period was 28.33 percent in Victoria, Australia, between the 4th Quarter 2006 and 3rd Quarter 2007, and that switch level was shared between competitors in the market.
Nicky Doran, head of marketing at Bord Gáis Energy, stated that the success of the campaign was down to a number of factors, including “the right price point, the simplicity of the message and great creative.”
“The web has proved to play a huge part in the success of the campaign with as many as 30 percent of customers switching on our micro site thebigswitch.ie,” added Doran.
Earlier this month Bord Gáis Energy passed the one million customer mark – 350,000 in electricity and 650,000 in gas. To mark the milestone the company launched a Community Energy Fund with €100,000, which will be made available as grants for 16 not-for-profit projects.
Bord Gáis Energy is not the only energy company in Ireland that has won customers from the incumbent, Airtricity has also won significant numbers of residential customers, and new entrants into the market are now a possibility given the shift from near inactivity just over a year ago to being one of the most active electricity markets in the world today.