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HIGHLIGHTS


At the heart of The Netherlands digital platform (r)evolution

Competitive pressures are driving innovation for Dutch utilities, and creating an example for others.

Operating in a fully unbundled retail energy market, utilities in The Netherlands see many of the same issues as their counterparts in similar markets around the world. Incumbents face pressure from new, legacy-free entrants offering attractive new services and customer-focused propositions. However, owing to The Netherlands’ proximity to Germany’s considerable renewables production, incumbent utilities with own power plants face an additional challenge. Electricity prices can fall to zero—or even reach negative pricing—as supply comes on stream from across the border on sunny and windy days. And the situation will continue as even more renewables continue to come into the system and, conversely, tax disincentives for generation through traditional means increase.

What this means in practice is that retail providers in The Netherlands are urgently exploring innovative ways to retain and attract customers through digital platforms that provide new services and information.

What will this platform (r)evolution look like? Most current initiatives are still in their early stages or being run as pilots. But even in their nascent state, they indicate some of the ways utilities in other markets may also need to start developing digital platforms. These are providing new ways to add value by, for example, giving consumers the ability to manage their energy use more effectively and make informed decisions about renewables adoption. New players are also harnessing digital platforms to disrupt traditional market arrangements. One example, Vandebron, directly connects individual producers of renewable energy to the end consumer, allowing consumers to purchase renewable power from a specific provider in a specific location.

Another platform, TOON, is provided by incumbent utility Eneco. TOON offers Eneco’s customers the opportunity to manage their gas and electricity use, with intuitive data visualization. The platform is also giving other companies the ability to develop and launch apps that can be used for a variety of connected home capabilities, such as lighting, security, electric vehicle charging, carbon monoxide alerts, supply interruption alerts and information about solar panel performance. Other platforms are helping prosumers and small producers trade excess capacity and manage demand response to optimize prices in real time for their energy at a household or company level.

As markets become increasingly decentralized, and the diversity of energy producers increases with the growing adoption of renewables, utilities need to respond with innovative business models and capabilities. Utilities seeking to develop and launch new platforms at scale will also need a very different mindset. They will need to become more agile, and quicker to develop new ideas.

The “succeed-fast/fail-fast” mentality that typifies digital is very different to the long-term, engineering approach associated with the utilities industry. And while barriers to entry in the form of capital requirements and regulations persist, they will not protect incumbent utilities from the increased competition from new market players forever. Finding new ways to access innovation, and cultivating new digitally-driven business models are must-do initiatives. Some of the developments we are seeing in The Netherlands today are lighting the way. Others will need to follow their lead.

For more information about the platform revolution, explore our 2015 New Energy Consumer insights.