Privatisation of the energy market has resulted in increased competition over the last few years. Today all energy providers, new entrants and the incumbents are faced with sustained pressure on energy margins due to declining usage per household. This is the result of improved energy efficiency and the installation of residential solar, and price pressure on commodities. In addition, price transparency increased (e.g. due to the rise of price comparison websites), stimulating churn and price competition (price being the most important buying criteria).
The pressure on margins, in combination with the increased acquisition costs, means that only a limited number of energy providers will survive standalone as minimum scale is difficult to reach in the small Dutch market. Further consolidation, in order to bring down the Cost to Serve (CtS) per customer to compensate for the increase in Cost to Acquire (CtA) per customer, is inevitable. Key consolidation criteria are: