Pixie Energy ECO Switch Tom Andrews 3 April 2019

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 Enable independent suppliers to deliver ECO cost-effectively and without cross-subsidy, and target delivery on specific localities Support Local Authorities and social housing providers to secure improvements to existing building stock Allow a broader range of installation companies access to the ECO market, increasing competition and driving efficiency Target ECO support more effectively to householders most in need of energy efficiency upgrades ECO Switch

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

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 Some have since gone under – Economy Energy, Extra Energy, Flow Energy, Spark Energy

Process LA lists “lots” of measures on auction platform Review period for installers and suppliers Solution providers offer prices to deliver (bid down) Suppliers offer prices to buy bill savings (bid up) Delivery agreement signed and property details shared Delivery by solution provider Supplier nominates measures and pays solution provider 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

How do we avoid a “race to the bottom”? A two-way auction How do we avoid a “race to the bottom”? Introduce the mechanism Talk about the clearing of the auction following this -

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 Some have since gone under – Economy Energy, Extra Energy, Flow Energy, Spark Energy

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 Current thinking is the following fees

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

Questions?

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!