AN INNOVATIVE APPROACH FOR A TRADITIONAL MARKET. AUDAX IN PORTUGAL
by Marc FARRIOL
The expansion of Audax Energía – then a very young company founded by José Elías – started right from Portugal.
It was 2013 and the Portuguese energy market seemed like the natural first port of call in Audax's internationalization strategy; the many common features with the Spanish one and the fact that it is still "immature" in terms of the variety of the offer, were elements that made this market interesting for growth potential and penetration possibilities.
In fact, although formally “liberalized”, the Portuguese market in fact maintained the typical characteristics of a “closed” space, with the presence of a few subjects – well-established in the territory and with strong positions of power – controlling almost all of it and with a regulatory framework that was still rather rigid, although transparent in its management.
Given the perimeter in which to operate, the challenge launched by Audax could not be placed on a strictly numerical level, of the "quantity" of users to acquire or "snatch" from the competition - it would have been a tactic difficult to sustain in terms of resources to invest and efforts required - but on that of the type of offers and the way to propose them to customers.
It is therefore to be found in the alternative approach, capable of modifying patterns that have been hardened by decades of monopoly positions, the innovative charge of the Catalan company's action. Compared to traditional solutions, Audax presented itself with new commercial proposals, flexible at competitive prices, to which a series of integrated or related services have been added, where elements previously scarcely considered by "big companies" stand out, such as environmental sustainability - with the sale of energy from renewable sources - and a more personalized and attentive customer care.
Audax was one of the first companies to offer “indexed” energy, that is, with rates that are based on wholesale market variations (and therefore with the possibility of taking advantage of them in the event of price drops) and that can include forms of promotion and discounts depending on the commercial policies of the company offering them. Similarly, always with a view to alternative and innovative commercial offers – which traditional companies were still struggling to offer – energy efficiency and photovoltaic solar energy exploitation services were introduced.
Today, after 5 years, Audax Portugal supplies energy (gas and electricity) to more than 8 thousand customers, for a total power of 750 thousand MW. The interesting fact is that 70% of the users is made up of companies that have chosen Audax above all for the flexible approach; this means the opportunity to negotiate an energy price that is as compliant as possible with the company's production needs. And not only for large companies, but also for medium-small businesses.
Looking at the Portuguese market in general, it is clear that the retail customer is a) increasingly attracted - and even accustomed - to the numerous offers that the aforementioned progressive commercial opening is creating and b) aware of being able to choose from a range of proposals and integrated services where the energy component - now a commodity - is only a part of the offer. The biggest obstacle, as happens almost everywhere, is managing to gain their trust and, perhaps first, their attention, especially when faced with rather high wholesale energy prices that do not allow sales companies to lower their rates.
The behavior of the Portuguese consumers, therefore, it can essentially be divided into two large typologies. On the one hand, there are those who are reluctant to change and remain substantially faithful to the energy company, regardless of the offers. On the other, there are those who, having understood the opportunities of a competitive market, seek the increasingly advantageous offer; even if it is a clientele whose "loyalty" is low, it becomes the main fishing ground from which the sales companies draw. Focusing attention on this second group, we arrive at a further differentiation between those who decide to negotiate the price directly with the sales company (looking for a contract that is as custom as possible) and those who rely on intermediaries or agencies. As happens in other markets, the determining factors are the price of energy and the customer care service.
Ultimately – aside from the tariff motive, which is sometimes difficult to intervene on – the most effective lever to counter the “switching rate” towards other suppliers is the proposal of innovative formulas and the integration of services aggregated to the sale of the energy component alone.
Currently, the new frontier of Audax offers for the Portuguese market, it provides a mix of fixed and indexed tariffs, in which the customer can choose in which months of the year they want the tariff to be fixed and in which to be indexed. In this way, each user can manage energy expenditure in a strategic manner, deciding according to their own needs and consumption forecasts. But that's not all. Renewables, especially photovoltaic solar, give rise to a new way of understanding energy, with self-consumption as a widespread system for having clean electricity at lower costs. For those who have a suitable surface (i.e. sunny) on which to install photovoltaic modules but do not want to invest money in their purchase and installation, a new usage formula is proposed. In practice, Audax will take on the costs, in exchange for the concession of the space by the owner-customers who, consequently, will be able to benefit from a significant discount on the bill.
And the future objectives – in line with those of the Group – are to provide services with ever-increasing added value, at competitive and environmentally sustainable prices. Investments in renewables and in particular in photovoltaic solar energy are moving in this direction. Two important projects, recently inaugurated, are evidence of this, which concern the purchase and marketing of clean energy for the Portuguese and Spanish markets. In January of this year, the parent company Audax Renovables signed a twenty-year agreement for the purchase and sale, at a fixed price, of energy generated by the Solara 4 and Ourika photovoltaic plants – located in Portugal – and those still in the planning phase. The contract – a Purchase Power Agreement – stipulated with the Irish WElink and Alianz will involve, at full capacity, 708 MW of installed power.
