By Ruben Van den Bossche, CEO and co-founder of Gorilla
What happens when an energy contract stops being profitable? And how long before anyone notices?
For energy retailers, small changes over the lifetime of an agreement can gradually erode profitability, often without anyone realising it is happening. As market conditions shift and customer consumption habits change, the margin attached to a contract can shift too.
Without clear visibility, this can become a source of commercial risk. Gorilla’s 2026 Energy Margin Intelligence Index found around 94% are confident in their margin visibility, yet only 31% say they can quantify margin leakage accurately and consistently.
To protect profitability in volatile markets, energy retailers need to move beyond reporting on margin after it has already been created or lost. That means understanding how profitability is evolving and what is driving those changes so they can act before small shifts turn into material losses.
The complexity behind energy retail margins
Energy retail contains a structural tension where retailers make long-term commitments in a market defined by short-term volatility.
Customer contracts are usually locked in for extended periods, while the cost to serve those customers changes continuously. Wholesale prices fluctuate, consumption patterns rarely align perfectly with forecasts, and non-commodity costs, regulatory obligations and settlement outcomes continue to change.
Margin is not a figure that can be calculated once and considered protected. It is continuously reshaped by decisions across pricing, trading, forecasting, billing and settlement teams.
The commercial risk lies in the cumulative effect of those changes. Individually, a forecasting adjustment, consumption variance or settlement discrepancy may appear manageable. Across thousands or millions of contracts, however, relatively small movements can materially alter portfolio profitability.
When the numbers start to drift
Retailers do not necessarily lose margin because they make poor commercial decisions. Pricing strategies may be carefully developed and customer acquisition is targeted towards profitable segments, yet the margin expected when a contract is signed can still erode over time.
Instead, margin can slowly erode through thousands of smaller decisions and assumptions made throughout the lifetime of a contract. So while a contract may be priced correctly when it’s sold, when forecasting, billing, consumption and settlement are managed across different teams and systems, it becomes increasingly difficult to understand how individual changes impact overall margin.
When these connections break, margin leakage becomes difficult to identify. The Index reports that 79% of executives cite siloed teams as a barrier to margin optimisation, and the same proportion cite fragmented ownership.
This is why margin visibility is a risk-management issue, rather than simply a reporting issue. By the time leakage appears clearly in financial results, the opportunity to prevent it may already have passed.
Where the margin picture comes together
Energy retailers have access to vast amounts of data across pricing, trading, forecasting, billing, customer behaviour and financial reporting. This information is hugely valuable, but retailers still need the ability to connect it into a single view of how commercial decisions are impacting margin.
Across energy retail, each function has visibility into the part of the business it is responsible for. Pricing teams understand the assumptions behind a contract. Trading and risk teams manage hedging and market exposure. Finance teams measure financial outcomes. But without connecting these perspectives, it becomes difficult to understand how individual decisions affect profitability across the lifetime of a contract.
The issue, therefore, is not necessarily a lack of data. It is a lack of orchestration between the data, systems and decisions that collectively determine margin.
This creates a gap between expected margin and realised margin. A retailer may know whether a portfolio has performed well overall, but that view often does not explain where margin has been created, where it has been lost, or which contracts are driving the difference.
The ability to understand margin at the level where decisions are made, down to individual contracts and customers where appropriate, is now essential. Without this connected view, retailers are often left identifying margin erosion after it has already occurred, rather than acting while there is still an opportunity to protect profitability.
Turning margin visibility into action
The future of energy retail will require a different approach to margin management. Rather than relying on retrospective reporting, retailers need the ability to continuously understand how market changes, customer behaviour and commercial decisions are affecting profitability.
Energy Margin Intelligence (EMI) provides a framework for creating this connected view. Rather than being another analytics tool, EMI is a way of managing the business through a single, connected view of margin. By bringing together cost, risk, consumption and commercial data, it gives retailers the intelligence to understand where margin is being created, where it is under pressure and, crucially, what action to take before losses become embedded.
As AI becomes more embedded in energy retail, the quality of the decisions it supports will depend on the quality of the margin information behind them. Automation can help retailers act faster, but automating pricing or renewals on an unreliable view of margin does not remove errors. Real-time margin intelligence tells retailers where automation can safely add value, and where decisions still need human judgement.
There is a longer-term shift taking place towards treating margin as something that can be managed throughout the life of a contract, and a vital consideration is deciding who owns margin across commercial, trading and finance, and giving them all the same view of it. This is how retailers move away from simply feeling confident in their margins and start scrutinising how capable they are of protecting it.
