Beyond Transactions: Leveraging Classic Psychology to Transform B2B Energy Relationships
Sparked by geopolitical uncertainty, and challenges around demand, the 2022 energy crisis thrust energy security and stable power supply into the spotlight for businesses across Europe.
In October 20241, as price volatility and reliability concerns returned, a record-breaking 113,000 businesses changed energy provider - many in search of a quick-fix solution to unpredictability.
But is this transactional mindset holding some businesses back?
Focusing on pricing and viewing energy as just another cost on the balance sheet, can underestimate the potential of energy to be a strategic asset that can drive growth, resilience and competitive advantage.
So, how can businesses shift to a smarter, more strategic approach that enables them to derive greater value from their energy contracts? One approach is to harness a classic psychological theory: Maslow’s Hierarchy of Needs2, and the concept of ‘laddering up’ to match changing needs as they evolve.
Diagram 1
Maslow’s Hierarchy of Needs pyramid
Step one: Building on the strongest foundations
Summary copy Maslow’s Hierarchy of Needs (see diagram 1) is a psychological theory exploring human needs and motivations through an ascending five-stage model, beginning with our survival essentials such as food and water.
The core principle is simple: humans need to meet our essential survival needs before we can consider growth needs. The same principle applies to businesses: just as humans need reliable sources of food and water, organisations need reliable energy provision.
When businesses have complete confidence in their energy provider’s ability to withstand market volatility, they are able to invest in long-term growth. In a particularly volatile environment of geopolitical tension, fluctuating prices and regulatory changes, an energy supplier needs to be financially robust. Ideally, they should have several decades’ experience navigating international energy markets, advanced trading capabilities, extensive business and government relationships, and broader stakeholder networks.
“Getting the basics right is critical. If I was looking after procurement, I would want certainty that the partner I chose could provide the level of service they have committed to throughout the duration of the contract – no matter what else is happening in the world,” says Greg Kavanagh Director of Industrial and Commercial Sales at Shell Energy UK.
Greg Kavanagh, Director of Industrial and Commercial Sales, Shell Energy UK“I see heritage, scale, and stability as non-negotiables for dependability.”
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Step two: Diversity of supply equals security
The second principle in Maslow’s theory is that of safety and security – which are equally fundamental to an optimal energy strategy. In a volatile environment, it is particularly crucial that energy supply be both predictable and adaptable to help businesses find stability.
The 2022 energy crisis highlighted how relying on a single source of energy creates vulnerability. Businesses that seek out providers with access to a diverse energy portfolio are likely to be more successful in shoring up energy security and mitigating market volatility.
A diversified portfolio can include alternative power sources, such as liquified natural gas, biomethane, wind, solar and hydro in addition to conventional gas and power. This helps to spread the risk, enabling businesses to manage energy price and security while staying resilient against market and regulatory changes. The United Nations notes: “Reliable renewable energy technologies can create a system less prone to market shocks and improve resilience and energy security by diversifying power supply options.”3
While choosing a provider based on price alone is an understandable choice for businesses, it inevitably reduces the customer-supplier relationship to a commodity exchange and nothing more.
Gianluca Formenti, Managing Director Shell Energy Italia comments “Italian industrials are repeatedly telling us that a supplier who can demonstrate a diversified energy portfolio is more interesting to them as access to the commodity could be less likely to be impacted by geopolitical shocks or technological issues.”
Selecting a trustworthy energy provider that can provide security, handle market fluctuations, and in some cases, unlock untapped revenue streams for businesses, elevates that relationship to a strategic one. In turn, this relieves businesses from having to constantly monitor and navigate market volatility, giving them a chance to focus on the bigger picture and foster growth.
Step three: Building stronger energy relationships
The next tier of Maslow’s theory, ‘love and belonging’, may seem somewhat removed from energy contracts. However, as businesses evolve and their needs become more complex, building meaningful relationships with their energy provider becomes key to unlocking value. It is also a growing trend.
According to a recent article in Procurement Magazine, while pricing and cost savings remain a primary objective, procurement’s role has grown to focus on broader value creation. The publication adds that “procurement leaders are now looking beyond immediate cost reductions to consider long-term value including sustainability benefits, innovation opportunities and strategic partnerships.”5
This is a trend that Shell Energy Italy’s GM, Gianluca Formenti, welcomes wholeheartedly. “It can be frustrating to see customers stuck in repeated cycles of procurement, which sometimes distract from building the supplier-customer relationships that enable achievement of strategic priorities,” he says. “Real progress comes when companies shift to focus on building long-term relationships with their energy providers – treating them as collaborators, rather than just commodity suppliers.”
Though decarbonisation is often discussed in the procurement process, it can be overlooked in favour of day-to-day pressures. Organisations can maintain progress on their emissions reduction targets while meeting near-term business needs by working with an energy provider that offers tailored decarbonisation strategies and scale-up options – such as renewable natural gas, energy management strategies, energy efficiency, or environmental products.
This type of relationship enables businesses to get maximum long-term value while meeting their energy goals securely, reliably and in a cost-effective manner.
Step four: Tailoring your energy strategy
The fourth stage of Maslow’s theory – confidence, achievement, and individuality – might be the most relevant and exciting, as impactful energy suppliers recognise and adapt to businesses’ unique needs.
While short-term fixed contracts can provide stability, they can also limit flexibility and hinder the longer-term strategies needed for transformational growth. The right energy supplier can tailor solutions to match specific operational and goals, or even risk appetite. Flexible purchasing products and power purchase agreements (PPAs), combined with a mix of conventional and renewable options can all help to meet changing needs.
Bespoke relationships empower businesses to evolve from passive consumers to active players in the energy landscape. Flexible procurement plans provide them with the confidence that they can adapt swiftly to market changes, and adopt a more agile and resilient energy strategy that puts them in control.
Step five: Unlocking peak potential
At the pinnacle of Maslow’s hierarchy theory lies self-actualisation, which he describes as the freedom to realise true business purpose and direction. Transposed to the energy world, this would enable a procurement relationship to go beyond delivering power and gas, and empowering businesses to thrive.
As the world transitions to net zero, energy systems are becoming increasingly decentralised – with more renewable, local electricity entering the grid. Battery systems, for example, can help to balance supply and demand, giving businesses the power to become more self-sufficient and take charge of their energy needs.
Virtual power plants (VPPs) are also revolutionising how businesses manage energy, integrating distributed resources such as solar, battery storage and flexible demand into a single intelligent network. By optimising energy use and market participation, VPPs like EGO6 – recently acquired by Shell in Italy – contribute to a more flexible, sustainable and resilient energy system that empowers industrial and commercial customers to take control of their energy strategy, security and decarbonisation pathways.
At that point, the relationship with the energy supplier is focused on enabling customers’ innovation, resilience, and industry leadership.
Empowering growth through psychological theory
In an increasingly uncertain world, energy can stand as a force for positive change through strategic relationships that can fuel innovation and drive competitive advantage.
Maslow’s Hierarchy of Needs illustrates how the most enriching outcomes come from responding to our higher aspirations. The same can be applied to the energy sector. At a foundational level, reliability and security are essential. However, real and sustained value emerges when businesses prioritise partnerships that elevate their ambitions, rather than merely meeting their basic requirements.
Energy has the potential to be more than just an additional cost on balance sheets: it can be a catalyst for progress. By working with trusted energy allies, businesses can evolve from keeping the lights on to achieving their boldest vision for the future.
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Footnotes
1 Energy Live News: Energy supplier switching returns to pre-crisis levels (November 2024)
2 VeryWellMind: Maslow’s Hierachy of Needs (April 2024)
3 United Nations: Renewable Energy- powering a safer future
4 Shell Energy Europe: Renewable energy generation
5 Procurement Magazine: Top 10 procurement trends of 2024 (4 December 2024)
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