Unlocking the Power of Psychological Theory to Transform Business Energy

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. This was particularly true in the UK, where our dependence on gas and power generation led to increasing energy costs, supply chain disruptions, and heightened concerns over long-term affordability for businesses.[1]

More recently, as price volatility and reliability concerns returned, many companies switched suppliers with some prioritising short-term cost reductions over long-term stability. A record-breaking 113,000 businesses changed energy providers in October 2024[2].

But is this transactional mindset holding some businesses back?

I believe that focusing on price and viewing energy as just another cost on the balance sheet underestimates 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 Needs[3], and the concept of ‘laddering up the hierarchy’ to match one’s evolving needs.

Step one: Build on the strongest foundations

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 robust. Ideally, they should have several decades’ experience navigating international energy markets, advanced trading capabilities, extensive business and government relationships, and broader stakeholder networks.

This is why I think getting the basics right is critical. If I were looking after procurement, I would want certainty that the partner I choose 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.

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 energy supply source creates…