Transform Business Energy with Psychological Theory Insights

Greetings, Net Zero News Community,

The energy landscape is evolving, especially in the wake of the 2022 energy crisis that brought the pressing issues of energy security and stable power supply to the forefront for businesses across Europe. In the UK, where reliance on gas and power generation has led to soaring energy costs and supply chain disruptions, the urgency for long-term affordability has never been more apparent.

As price volatility and reliability concerns resurface, many companies have opted to switch suppliers, focusing on short-term cost reductions rather than long-term stability. A staggering 113,000 businesses changed energy providers in October 2024 alone. However, this transactional mindset raises an important question: is it holding businesses back?

In my view, prioritising price and treating energy merely as a line item on the balance sheet underestimates its potential as a strategic asset that can foster growth, resilience, and competitive advantage. So, how can businesses embrace a more strategic approach that maximises the value derived from their energy contracts? One insightful approach draws from a classic psychological theory—Maslow’s Hierarchy of Needs—encouraging us to ‘ladder up’ to meet evolving needs.

Step One: Build on the Strongest Foundations

Maslow’s Hierarchy of Needs is a psychological framework that categorises human motivations into five ascending levels, starting with fundamental survival essentials like food and water. The core principle suggests that individuals must satisfy their basic needs before pursuing higher-order growth needs. This concept extends to businesses: just as individuals require reliable access to sustenance, organisations need dependable energy supply.

When companies have confidence in their energy provider’s capability to withstand market fluctuations, they are more inclined to invest in long-term growth. In today’s unusually volatile landscape, characterised by geopolitical tensions, fluctuating prices, and regulatory changes, the energy supplier must be financially robust. An ideal partner would possess decades of experience navigating international energy markets, advanced trading capabilities, and extensive relationships with businesses and governments alike.

Getting the basics right is critical. If I were responsible for procurement, I would seek assurance that the partner I choose could consistently deliver on their commitments throughout the contract’s duration, regardless of external circumstances.

Step Two: Diversity of Supply Equals Security

The second tier of Maslow’s model—safety and security—is equally vital for crafting an effective energy strategy. During periods of volatility, the importance of predictable and adaptable energy supply becomes paramount for businesses aiming to survive and focus on growth.

The 2022 energy crisis underscored the risks of depending on a single energy supply source. Businesses that pursued providers with access to a diverse energy portfolio emerged more resilient in the face of market volatility. A diversified portfolio can encompass alternative power sources, including liquefied natural gas and biomethane, alongside traditional gas and power. This diversification mitigates risks, reducing reliance on any single energy source and enabling companies to manage energy price fluctuations while remaining resilient to market and regulatory changes.

Additionally, renewable energy sources such as wind, solar, and hydro can contribute to this strategy. As noted by the United Nations: “Reliable renewable energy technologies can create a system less prone to market shocks and improve resilience and energy security by diversifying power supply options.”

While it’s understandable for businesses to choose providers based solely on price, this approach reduces the customer-supplier relationship to a mere commodity exchange. Opting for a trustworthy energy provider capable of ensuring security and navigating market fluctuations elevates this relationship to a strategic partnership. Such an alliance frees businesses from the burden of constantly monitoring market volatility, allowing them to concentrate on broader goals and foster growth.

Step Three: Building Stronger Energy Relationships

The next tier of Maslow’s hierarchy—‘love and belonging’—may seem remote from energy contracts. However, as businesses evolve and their needs grow more complex, forging meaningful relationships with energy providers becomes crucial for unlocking value. This trend is becoming increasingly evident.

A recent article in Procurement Magazine notes that while price and cost savings remain primary objectives, the focus of procurement is shifting towards broader value creation. The publication observes that “procurement leaders are now looking beyond immediate cost reductions to consider long-term value including sustainability benefits, innovation opportunities, and strategic partnerships.”

Meaningful progress can occur when businesses prioritise long-term relationships with their energy providers, viewing them as collaborators rather than mere commodity suppliers. For example, Hydro, a company committed to decarbonisation, regards long-term partnerships as essential for achieving its goals. “As we work towards net-zero, selecting the right energy partner is a board-level priority. We needed a provider that understood our industry, our ambitions, and could support us in the long run,” explains Lars Lysbakken, Energy Portfolio Manager at Hydro.

While decarbonisation is frequently discussed during procurement processes, it can often be overshadowed by immediate pressures. However, organisations can continue to make strides in reducing emissions while meeting short-term business needs by collaborating with energy providers that offer tailored decarbonisation strategies. These can include renewable natural gas, energy management strategies, and energy efficiency consultancy. This type of relationship ensures that businesses achieve maximum long-term value while securely and reliably meeting their energy goals.

Step Four: Tailoring Your Energy Strategy

The fourth stage of Maslow’s theory—confidence, achievement, and individuality—may be the most relevant and exciting, as effective energy providers recognise and adapt to the unique needs of businesses.

While short-term fixed contracts provide stability, they can also limit flexibility and obstruct the long-term strategies necessary for transformational growth. The right energy provider can tailor solutions to align with specific operational and strategic objectives, or even risk appetites. Flexible purchasing products and power purchase agreements (PPAs), combined with a mix of traditional and renewable options, can help meet evolving needs.

Bespoke relationships empower businesses to transition from passive energy consumers to active participants in the energy landscape. Flexible procurement plans provide the confidence to adapt swiftly to market changes, fostering a more agile and resilient energy strategy—one that places businesses in control.

Step Five: Unlocking Peak Potential

At the pinnacle of Maslow’s hierarchy lies self-actualisation, described by Maslow as the ability to realise true business purpose and direction. In the context of energy, this translates to a procurement relationship that transcends mere provision of power and gas, empowering businesses to thrive.

As we move towards net-zero emissions, energy systems are becoming increasingly decentralised, with more renewable and local electricity entering the grid. Battery systems play a crucial role in balancing supply and demand, granting businesses the autonomy to become more self-sufficient and take control of their energy needs.

Innovative solutions like virtual power plants (VPPs) are revolutionising how businesses manage energy by integrating distributed resources such as solar, battery storage, and flexible demand into a cohesive intelligent network. By optimising energy usage and market participation, VPPs—such as EGO, recently acquired by Shell in Italy—contribute to a more flexible, sustainable, and resilient energy system that empowers industrial and commercial customers to take charge of their energy strategies and decarbonisation pathways.

At this advanced level, the relationship with the energy supplier shifts to one focused on enabling customers’ innovation, resilience, and leadership within their industries.

How Psychological Theory Powers Possibility

In a world marked by uncertainty, energy can serve as a dynamic force driving positive change through strategic partnerships that fuel innovation and enhance competitive advantage.

Maslow’s Hierarchy of Needs illustrates that the most enriching outcomes arise from responding to higher aspirations. The same principle applies 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 basic requirements.

Energy has the potential to be more than just an expense on balance sheets; it can act as a catalyst for progress. By collaborating with trusted energy allies, businesses can evolve from merely keeping the lights on to actualising their boldest visions for the future.

References:

[1] The report: protecting the UK from a future energy crisis (October 2024)

[2] Energy Live News: Energy supplier switching returns to pre-crisis levels (November 2024)

[3] VeryWellMind: Maslow’s Hierarchy of Needs (April 2024)

[4] United Nations: Renewable Energy—Powering a Safer Future

[5] Procurement Magazine: Top 10 Procurement Trends of 2024 (4 December 2024)

[6] Shell Energy Europe Insight: From Sunshine to Software: Shell Acquires Virtual Power Plant in Italy (December 2023)

This article was featured in the June 2025 issue of Energy Manager magazine. Subscribe here.