According to a report from Datamonitor, industrial and commercial energy suppliers as they exist today may soon be a thing of the past.

Datamonitor's research reveals that over 85% of UK electricity suppliers and 60% of gas suppliers believe energy management services will be offered as an integral part of energy supply by 2005. Fierce competition in energy supply has forced suppliers to review their strategies for increasing revenues and tying customers in for the longer term. At present, customers are switching suppliers every one or two years.

As margins in energy supply are extremely low, suppliers need to compete on factors other than price. Energy management is a higher margin product and offers a vehicle to build customer relationships and increase revenues.

Datamonitor's UK energy analyst Andrew McKechnie says: "Customers increasingly require more help with their energy management provisions, and energy suppliers are in the perfect position to do this. Their large customer bases and strong financial backing enable them to offer profitable energy management solutions either through partnerships or joint ventures with energy management companies, or via the acquisition of smaller energy management companies."

Energy suppliers believe that energy management will be provided through one or many partnerships with specialist energy management companies, Datamonitor says. Suppliers are already offering the total energy package; PowerGen, for example, has recently rebranded its energy management arm under the PowerGen brand.

By 2005, the energy management market is set to grow to 179% of today's value, when the value of products on the market is forecast to be £677 million. However, the potential of the market is far greater than this - if all industrial and commercial users invest in energy management solutions then the market value of all products in use will be close to £1.8 billion.

Overall, suppliers interviewed during Datamonitor's research felt there will be a huge increase in the rate of growth of the market, as technological advancements make energy management solutions cheaper and therefore more accessible to the smaller end-user. Greatest growth will be in monitoring and targeting services, closely followed by energy management hardware and the provision of backup services.

Anna Lagerkvist