Energy retail has crossed a threshold, writes Ruben Van den Bossche, Founder and CEO, Gorilla. Margin leakage that was once considered tolerable has become a structural risk; not because of a single market shock, but because the visibility gap between theoretical and realised performance is quietly draining profits.
To start with, pricing teams model healthy margins, but months later, the finance teams’ reports show a very different picture. Between those two moments, value leaks through forecasting drift, hedging mismatches, non-commodity charges and settlement adjustments that rarely trigger alarms. None of it alone is substantial, but together it steadily erodes margins – and in a market where volatility is the baseline, that gap between theoretical and realised performance is no longer sustainable.
Margins are under pressure, price movements are accelerating and customer demand is becoming more complex, so retailers can no longer afford to accept delayed insight as standard. By the time this margin loss becomes visible, the value is already gone.
Retailers know that the old logic no longer holds; accepting loss as ‘part of the model’ is no longer sustainable. But without clear, real-time insight into where margin is created, protected or destroyed, control remains out of reach. What appears stable on the surface often mask deeper structural weaknesses. And in today’s market, the ability to see below the surface is fast becoming the difference between resilience and regret.
Where profitability quietly declines
Across the market, big events like wholesale spikes or regulatory shifts usually draw retailers’ attention away from the less obvious changes. But, as a result, margins are left to bleed out under the radar, which is known as invisible erosion. This is often driven by data discrepancies and siloes, where inaccurate or inconsistent volume-forecasts across teams create imbalanced ratios that premiums fail to cover. In the UK, costs like non-commodity charges that are slow to respond to small volume changes, can also be a contributing factor when forecasting assumptions are wrong. Very quickly, small discrepancies can turn into more significant losses.
Price spikes have also sent negative impacts ricocheting across the industry, placing additional financial strain on suppliers forcing some of them to exit the market altogether. As the wholesale market becomes more competitive, retailers will have to find new sources of competitive advantage, otherwise the once-small mistakes hidden below the surface will start to become a very large pinch point.
The whole issue is exacerbated by the fact that most energy retailers still manage margin using tools and processes designed for a more stable environment but, today, data is fragmented across pricing, trading, billing and finance, and each team operates with a different view of risk and performance. Many current systems are backward-looking, only able to explain what went wrong after value has already leaked away. In the end, no one has a complete picture and what retailers cannot see they cannot control.
The shift to Intelligent Energy Management
Retailers are effectively operating with only part of the full picture, unable to spot the issues quietly eroding value beneath headline performance. Energy Margin Intelligence (EMI) closes that gap. Instead of stitching together hindsight reports from siloed systems, it brings pricing, forecasting, billing and risk data into one view and takes the manual work out of the most error-prone processes.
At its core, EMI is built on four principles: giving retailers the ability to clearly see their margin, actively steer pricing decisions, protect value and use margin insight to drive sustainable growth.
The margin iceberg – the hidden portion of profit that often goes unnoticed and seeps through the cracks – is an ongoing issue because most retailers struggle to clear the first barrier: visibility. Without a clear, real-time view of margin, commercial teams can’t price with confidence or structure deals that protect long-term value. With real-time visibility into margins, EMI lets teams adjust offers, protect value and retain the right customers before hidden losses appear on the balance sheet.
Today, price risk is routinely pushed downstream. With no party willing to shoulder responsibility it, energy retailers are left exposed, tied into long-term contracts or expected to accept the impact of new taxes, charges and regulatory shifts alone. The idea of ‘acceptable loss’ no longer holds. They know value is leaking, but without the right intelligence, they can’t see where or why. What looks manageable on the surface often conceals deeper, structural issues. Survival now depends on going beyond what’s visible, and building the intelligence needed to operate below the surface, not just above it.
Learn more: https://www.gorilla.co/en
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