New analysis by LCP Delta has identified a potential €350 billion value pool in the residential energy transition, across key markets comprising the UK, Germany and France, signalling one of the largest market opportunities in the continent’s shift to net zero.
As Europe’s energy transition accelerates, the analysis reveals evolving and emerging pools across hardware, services, finance, energy retail, and flexibility, creating lucrative opportunities for companies that can adapt to the rapidly changing landscape. However, LCP Delta’s analysis comes with a warning to traditional energy retailers: evolve your business models to thrive in the energy transition or risk being left behind.
Despite operating in the largest value pool, energy retail, worth around €300 billion, energy retailers today face razor-thin profit margins of just 2–5%. This leaves them vulnerable to market volatility and the threat of being overtaken by agile challengers offering integrated, customer-centric services. Yet, for those willing to innovate, LCP Delta’s analysis shows a multibillion-euro profit opportunity. Retailers can expand their product portfolios and cross-sell into other value pools, leveraging their unique position as the primary customer touchpoint in the energy ecosystem.
By increasingly expanding into the Services value pool, estimated at €25 billion, retailers can grow revenues through the installation of electrification assets and most profitably, by providing recurring service contracts. Such an approach in this pool means that operators could be unlocking higher profit margins of 10–20%. Meanwhile, the Finance value pool, worth nearly €3 billion, offers one of the most promising growth avenues right now. By providing financing alongside installation, maintenance, and energy supply, retailers can challenge traditional banks and deliver seamless, bundled energy solutions to consumers.
One value pool which is set for significant growth in the coming years is the customer flexibility market. While currently quite small, the market is expected to grow by a factor of five up to 2030, unlocking significant potential for businesses.
Commenting on the opportunities for energy retailers and investors, Jon Slowe, Partner at LCP Delta says, “Retailers who embrace the energy transition, diversify their offerings, and tap into adjacent value pools like installation, finance, and flexibility stand to unlock new revenue streams and deepen customer relationships.
“For investors, the opportunity lies in backing retailers that evolve into full-service energy providers. The winning strategy will be to invest in companies that can cross-sell, bundle services, and leverage AI to drive revenue while managing costs, turning low-margin energy supply into a gateway for higher-margin growth.
“Over the last decade we have seen companies such as Octopus Energy come into the market and shake up energy retailers by offering a wider range of services with a digitally led business model. Across Europe we are now seeing a wave of new and emerging challengers to the market such as Tibber which is providing flexibility services alongside traditional energy retail, and 1KOMMA5° which operates in almost all of the value pools.”
Commenting on the opportunities for non-energy retailers, Rebecca Forgesson, Associate Consultant at LCP Delta added, “The energy transition is not just an opportunity for retailers but also manufacturers, tech companies and financiers who want to play in the value pools. For example, some EV manufacturers are exploring opportunities in energy transition value pools.
“Even disruptive energy retailers won’t have the playing field to themselves. And for tech companies there are many ‘picks and shovels’ strategies to fill gaps in other’s capabilities.”
