What comes after ‘peak profitability’ for energy retailers?

• 18 days ago (2026-01-10)
• Junior Isles

Africa 359 Asia 994 Australasia 63 Battery 2 Biofuel 1 Biomass 8 Biomethane 1 Clean energy 1 Climate change 23 Coal 349 Cogeneration 3 Concentrating solar 7 Cyber security 8 Decarbonisation 3 Decentralised energy 6 Demand side management 3 Demand side response 3 Digitalisation 12 Distributed energy 10 Distribution 151 Electric vehicles EVs 4 Emissions 69 Energy management 3 Equipment 2 Europe 1154 Gas 452 Gas engine plant 83 Gas fuel 3 Horizon 2 Hydroelectric 17 Hydrogen 73 Hydropower 154 Latin America 96 Maintenance 5 Marine 1 Metering 2 microgrid 5 Middle East 363 North America 1068 Nuclear 721 Offshore wind 128 Oil 24 Operations 4 Policy 9 Regulations 3 Renewables 814 smart grid 2 Smart meters 1 Solar 331 Storage 49 substation 8 Tepco 2 Tidal 2 Toshiba 4 Transmission 230 US Senate Washington 4 Waste-to-energy 1 Wind 288

---

Ruben Van den Bossche, Founder and CEO of Gorilla

For a long time, UK energy retailers operated on a blueprint of stability. Data from Consolidated Segmental Statements across the past few years shows that, from 2019–2021, the market had tight but predictable margins. So if retailers got their hedging right, they could model their year with reasonable confidence.

But now, that blueprint has been shredded. By 2022–2023, the data shows a market where margins have ‘spread all over the screen’. Volatility has become the baseline, but a perfect storm of factors means that the headwinds facing retailers in the UK are only intensifying:

1. The ‘concertina effect’: a mass of short-term contracts signed during the crisis is bunching up for renewal, creating a potential revenue gap in 2026/27
2. New debt risks: insolvency rates are peaking and 20 per cent of SME customers are currently in debt to their suppliers
3. Operational shocks: the move to Market-wide Half-Hourly Settlement (MHHS) and the insatiable demand for new data centres threaten to upend forecasting models and create Renewable Energy Guarantee of Origin (REGO) scarcity

However, it’s not just an issue in the UK. While these problems are specific to this market, every retailer around the world could describe stories of regulatory change, surging demand - particularly from data centres - and margins that have fluctuated wildly in response to market volatility.

In this environment, relying on historical averages or static spreadsheets becomes a risk to long-term survival.

Erosion taking place below the surface

While retailers are naturally fixated on big events like wholesale spikes or regulatory shifts, margins are often bleeding out from a thousand papercuts. This is the phenomenon of invisible erosion.

Even when the big number looks healthy, value is being destroyed quietly in the background.

Discrepancies between forecast and actual volumes can create imbalanced ratios that premiums fail to cover. For example, costs like non-commodity charges, that don't react to small changes, can be a contributing factor, and gaps in the timing of hedges lead to slight losses in value. Also, over time, settlement drifts - small reconciliations - chip away at the bottom line but rarely trigger an alert on daily invoices. The biggest contributor, however, is the ‘visibility gap’: the disconnect where pricing teams model a healthy theoretical margin but finance teams report a much lower realised margin months later.

The price spikes have since sent negative impacts ricocheting across the industry, placing additional financial strain on suppliers that has forced some of them to exit the market altogether. As the wholesale market becomes more competitive, retailers will have to find new sources of competitive advantage, otherwise the once-small mistakes hidden below the surface will start to become a very large pinch point.

The role of Energy Margin Intelligence

The biggest barrier to profitability is internal. The trouble is, while margin management is currently everyone's responsibility, it isn’t one person’s job.

We see this clearly reflected in the data silos that plague even the most sophisticated retailers. Sales, pricing and trading teams often operate with different datasets or different ‘versions of the truth’:

Sales teams push for the lowest price to win the deal

Risk teams try to protect the downside

Finance teams count the cost after the fact

Without a unified view, retailers are flying blind, so the goal must be one version of the truth that allows teams to move fast without breaking governance.

As an industry, we cannot solve 2026 problems with 2019 tools. Retailers have the data but they lack the ability to bring it together to truly understand their margins and start to prioritise margin growth.

To thrive in this new reality, retailers must move from simple data processing to Energy Margin Intelligence (EMI), which applies advanced AI and decision intelligence to unify data, automate the most error-prone workflows and give teams the real-time visibility they need to take action. EMI rests on four principles designed to meet the realities of today’s market: retailers need to use data to see their margin, steer their prices, protect their margin, and grow their business.

It all starts with visibility, and giving retailers a real-time understanding of margin at contract level, not just portfolio level. From there, they can empower their commercial teams to price with confidence, ensuring deals are set up to retain value in the long term. EMI aligns pricing logic and billing execution, so complex products can be invoiced accurately, which helps stop margin leakage. And rather than waiting for customers to signal dissatisfaction, EMI uses data and AI to anticipate the right product mix needed to retain and grow accounts before trouble arises.

Retailers no longer have a choice. The signals coming from US and European power markets, in no uncertain terms, point to permanent change, which is why EMI plays such an important role in the success of the market moving forwards.