Opportunities in online energy purchasing

Last week, i-FM reported on a recent in-depth study of utilities' websites. The results were overwhelmingly negative, with Andersen Consulting suggesting that most energy suppliers were not yet ready for online trading.

New research from technology specialist Forrester has set these findings in the context of the potential scale of the market - clarifying the size of the opportunity apparently so far being ignored by many suppliers. The figures also point to the scale of the opportunity online energy purchasing may bring to FMs as commercial consumers.

Forrester says that ultimately online energy trading will reshape the gas and electricity industries. In research focusing on the US market, potential online sales are projected to be $266bn by 2004.

The ability of buyers and sellers to find each other on the internet is radically changing long-established patterns of energy trade, reports Forrester. Price competition will supplant any other existing basis of trade, pitting providers against each other in online bidding wars. To gain market share, providers will be forced to expand their geographic trading arenas, introduce new product-service bundles and employ innovative marketing and branding strategies.

"The energy market is ripe for the internet," says senior analyst Varda Lief. "The gas and electricity markets will benefit greatly from the new analytical tools that help buyers and sellers analyse purchasing behaviour and market trends in real time. With deregulation loosening up these markets, the internet will quickly break down today's inefficient practices."

Elliott Chase