Stability and innovation: how we’re delivering for our customers

29th September 2022

Stability and innovation: how we’re delivering for our customers

 

As we’re all too aware, the Australian energy market is facing unprecedented times that are causing uncertainty and instability across the country. With many new entrants to the market failing, what businesses need now, more so than ever, is an energy partner they can rely on that offers financial stability and delivers the innovation needed to drive market change.

SmartestEnergy is that partner and here’s why. 

 

The energy market today

There’s been a perfect storm of local and global factors that have contributed to today’s energy market crisis. This includes the war in Ukraine, power station outages and changing weather patterns impacting demand and the availability of intermittent renewable energy.

Globally, gas and electricity markets have traded up on the back of higher fuel costs across LNG, crude oil and thermal coal prices as economies recover from the pandemic and navigate factors including the impact of Russia reducing flows of gas into Western Europe in response to economic sanctions following the invasion of Ukraine.

 

Cumulative Price Threshold

The Cumulative Price Threshold (CPT) is the maximum price across seven days' worth of trade. In June, we saw some states hitting the CPT, which led to generators being 'unavailable' as the administered CPT price of $300 was below their cost to service. This actually put a stop to normal operations. AEMO announced a suspension of the spot market in all regions of the National Electricity Market. Navigating higher prices and energy market volatility continues and we may be in a new market paradigm as things adjust to a new norm.

If you are interested in learning more about the CPT the updated values and underlying calculations are available in a schedule of reliability settings on the AEMC website.

 

Survival of the most stable

As well as uncertainty and increased costs for businesses, the energy market crisis has seen a number of suppliers failing and exiting the Australian market or ceasing to accept new customers. The reason being that this increase in market volatility and AEMO’s price cap, has left some suppliers unable to manage costs.  So far in 2022, seven retailers have failed or been suspended, impacting thousands of households and businesses.

The UK energy market has faced and continues to face similar challenges. In fact, from Autumn 2021 to Spring 2022, a total of 26 energy retailers failed in the UK. That equated to about 30% of the energy suppliers leaving the market within less than a year. SmartestEnergy weathered this storm well and so our experience overseas puts us in a unique position to support our Australian customers. Our business is stable and we’re not going anywhere. While we established our Australian presence in 2020, we have been providing customer solutions and innovation across global energy markets, including the UK, for over 20 years.

In part this is down to our international experience but having a strong balance sheet is essential to ride out periods of volatility.  Energy markets can be a hugely collateral-intensive place to operate, where there can be periods that shake out new entrants looking to innovate.

 

We’re backed by the best

It’s not just our experience that gives us stability. SmartestEnergy is a wholly owned subsidiary of the Japanese Marubeni Corporation. Put simply, this gives us that global resilience and financial stability. Marubeni’s credentials speak for themselves. It’s a BBB+ (S+P) rated company which in 2021 ranked #165 in the Global Fortune 500 and the same year had $62 billion in total assets.

If needed, the corporation is able to use the full strength of its balance sheet to support the SmartestEnergy Group, or any of its companies for that matter and the importance of this, particularly during uncertain times, cannot be underestimated. It gives our customer’s further confidence they’re in safe, financially stable hands.

Marubeni has been the owner of SmartestEnergy since day one and has been present in Australia for 70 years. One of Marubeni’s aims is to anticipate the issues and challenges facing society and create innovative solutions for customers and for the world. Our work fits with this perfectly as we strive to help decarbonise the energy market.

 

The future is bright

Let’s come back to confidence, as it’s hugely important. We know that having confidence in your energy partner is vital and this comes from knowing we’re financially stable, that we’re committed to navigating the energy crisis with our customers and that we keep our eye on the future, not just today.

We can’t predict the future, unfortunately, but what we can do is help our customers mitigate the impacts of a volatile energy market through our continued support and stability. And, importantly, give businesses the confidence that they’ve chosen the right energy partner. This is what drives us forward.

The SmartestEnergy purpose can be explained further via our six key business pillars:

• Empowering the net zero transition
• Partnerships that energise
• Technology that simplifies
• Global resilience, local brilliance
• Driving positive change in the system
• Connecting communities

This shows the wide scope of how we operate our business to deliver innovation to our customers and work to drive market change.

We’re proud of our business, proud of our customers and proud to commit to deliver against our purpose. The future is bright. We’re confident positive change is happening in the wider energy market and we want you to have confidence that we’ll be with you every step of the way.

If you would like more details you can view our Financial Credibility Statement here or speak to us here.