With retail competition, network optimization and nuclear decommissioning all top of mind, Japan as it is today will look entirely different in just five years.
Greg Guthridge shares some examples of the transformation underway in Japan’s utilities industry.
Asia Pacific is one of the most diverse, dynamic energy markets in the world. We can expect that countries in the region will move in different directions in the future, both maturing markets that will become even more sophisticated in terms of consumer engagement and value proposition and in new, emerging markets that have enormous opportunities in terms of generation and distribution.
Greg Guthridge shares his insights into the transformation and reinvention we can expect to see in the region.
While utility companies are likely to remain the major force in the future energy consumption market in Asia Pacific, they risk gradually losing market share to new players. Greg Guthridge shared some additional thoughts regarding new competition in the energy retail market, and how utilities can address challenges and embrace new opportunities.
How can utilities address challenges from new market-shaping forces?
From a strategic perspective there are four practical measures—what we call “no-regrets” capabilities—for utility companies.
First, utilities should reduce costs and improve operational efficiency. Utilities often have a long history with a complicated corporate structure. In contrast, startup companies do not have such complexity, so utilities should streamline their corporate structure to become more agile.
Second, they need to reshape the customer experience. In the future, utilities must be able to engage consumers on their new digital terms.
The third point relates to new products and services. Utilities will need to develop new value propositions, including bundling products and services that include connected home, digital equipment and renewable energy.
The final point is to select strategic partners. With the development of new energy technologies, energy storage and electric vehicles, utilities should form strategic collaboration. By doing so, utilities will have the opportunity to go beyond traditional business models and develop new businesses that focus on creating a life style experience for its customers.
Among new market entrants, which ones will be the first to enter the energy market?
I think the first to enter the energy market will be companies providing home services, such as television, telephone, home security and other services.
The second likely candidate will be traditional retail companies that can sell their products and electricity in packages, and profit through products selling, financing and follow-up services.
I think the third will be the Internet companies, and then others to follow will be transportation-related companies, such as carpooling service and electric vehicles related companies.
Do you think there is an opportunity for cooperation between utilities and Internet companies?
Yes, I think there is a strategic opportunity here. Utilities can leverage the strength and experiences of Internet companies to become digitized.
Also, content gamification is a potential cooperation area, and can create new experiences for energy consumers. It’s about determining how to move energy consumption activities online, make them more interactive and engaging, and giving consumers new opportunities to save money by using integrated smart devices.
Another kind of cooperation is a community-based cooperation; for example, an energy retailer cooperating with a social media channel to enable consumers to share and compare their energy use experiences with friends online. Another trend from the retail side: groups of consumers forming communities online or on their mobile devices to purchase gas, electricity and other related services and products.