Pixie Energy ECO Switch

1. Pixie EnergyECO Switch Tom Andrews 3 April 2019

2. Objectives for ECO Switch • We are proposing a tri-partite trading auction platform, which will create a market for energy efficiency, enabling a simple and cost-effective route to delivering Energy Company Obligation (ECO) license requirements

3. Tri-partite • Independent suppliers obligated to deliver over 25% of ECO but no economies of scale or national reach • Local authorities and social housing groups have goals to reduce carbon emissions and protect the vulnerable • But budgets are increasingly tight and there is no clear route to recoup investment in domestic energy efficiency • Can grant access to a special element of ECO (flexible eligibility), but no simple route to engage with multiple suppliers • Local installation companies have difficulty in accessing ECO, leaving bigger often inefficient players to dominate • This has resulted in poor quality work and excessive costs • Installers often tied to a single supplier, an existential risk to the business if ECO work dries up

4. The State of ECO • ECO obligation based on number of customer accounts • Phase 1 saw Bulb, Economy Energy, Green Star gain ECO duties • But supplier exits of Economy, Extra • Phase 2 allocations issued to suppliers last month • We expect to see three or four additional suppliers from 1 April when published

5. Process • Suppliers kept informed by automatic calculation of lifetime bill savings by Ofgem deemed scores methodology • This will also be used with bid and offer prices to calculate costs in pence per pound of lifetime bill savings (p/£LBS), the standard price metric • Suppliers offered option to bid in p/£LBS • Other parties – social housing, large private landlords, innovation parties – could also list measures for delivery as originators

6. A two-way auction How do we avoid a “race to the bottom”?

7. Internal trial • Held last week within the team to test functionality • Frenetic bidding activity and some “interesting” prices • But vital learnings on structuring lots and presenting information • Analysis of activity proceeding and platform being revised following feedback

8. Commercials • Legal/ contractual framework to be kept to a minimum during trial, while the platform evolves • Auction T&Cs will set out bidding process and rules, including a requirement for the successful parties to enter into a delivery agreement at the price discovered • Suppler and installers will then enter into a bi-lateral contract for delivery of measures • We propose the following fee structure: • A modest annual membership fee, paid by installers and suppliers • 1% commission on successful auctions, paid by suppliers • No direct fees for LAs or social housing

9. Current status and timeline • Continuing bi-lateral discussions ahead of first trial in April, based on Norwich and environs – discussions as to whether trial is virtual or actual • Prototype platform is ready but being enhanced to reflect recent learnings • Legal documentation is also being prepared • Once complete, will begin householder recruitment • Wider trial planned for the summer, covering East Anglia • If trials successful, we plan stage regional auctions across GB later in the year

10. Questions?

11. Thank you for listening Tom Andrews 01603 542 118 t.andrews@pixie-energy.com Please get in touch if you’d like to find out more!