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Total has 'Uber-like' ambitions to shake up French power market

 

 


By Bate Felix, Benjamin Mallet / Reuters

PARIS
Petroleumworld 11 29 2018

Total's French retail electricity arm is on track to win 700,000 customers this year, challenging former state monopolies EDF and Engie with a low-cost, digital service it believes could mimic Uber's success in the taxi market.

Total Spring is signing up 3,500 to 4,000 customers every day, attracting them with a 10 percent discount to the regulated price that state-controlled rival EDF must use, its director Marc Bensadoun told Reuters.

A decade after liberalisation, France's power supply market is final coming to life as the process of switching providers has become easier and the entrance of new players has increased customer awareness of the options available.

EDF still accounts for about 80 percent of the retail power market, with roughly 26 million customers, but it is losing around 100,000 a month, according to French energy market regulator CRE.

Since oil giant Total's entry into the market a year ago, several other major French companies - including retail groups Casino and Leclerc - have launched retail electricity offers with big discounts to EDF's regulated tariffs.

Italian energy group Eni also launched an offer a year ago, with a target of around two million clients by 2021.

Total is aiming for at least 15 percent of the French retail gas and power market by 2022, or six million customers, up from about 6 percent at the end of 2017, helped by its $1.7 billion purchase of alternative power supplier Direct Energie .

Retailer Leclerc is offering a discount of up to 20 percent to the regulated price to the 14.2 million customers who hold its loyalty card. The discount takes the form of a voucher to use in its network of 681 stores, and it aims to recruit three million clients by 2025.

Casino has declined to give its target.

Total views its 15 percent market share goal as vital to being competitive and developing additional services, Bensadoun told Reuters at Total Spring's office in central Paris.

“But market share is only part of our strategy,” he said. “We also aim to develop our production capacity to guarantee low-carbon energy at attractive prices to our customers.”

Total has acquired two gas-fired plants following its purchase of Direct Energie, and plans to increase its electricity generation in France to 10 gigawatts (GW) by 2023 from 5 GW.

The company has said it will bid for French hydro power concessions and expand its solar generation units in France.

Despite its push into the retail power and gas market, Total - which has regularly been tipped as a potential buyer of Engie - has no plans to become a mega-utility.

“We considered that the competition was asleep and we decided to shake things up,” Chief Executive Patrick Pouyanne told investors last week.

The company intends to keep its retail power unit in France lean, to continue selling at a discount to regulated tariffs.

“We came into the market ... with a ‘low-cost' model which is fundamentally digital. Today, we are managing three to four million clients with 500 people. So I can say that we are a kind of Uber in the electricity market,” Pouyanne said.

 


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Reporting by Bate Felix, Benjamin Mallet and Dominique Vidalon; Editing by Sudip Kar-Gupta and Mark Potter from Reuters.

reuters.com
11 26 2018




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