For the energy transition to be successful, customers will need to get on board with new services, delivered in new ways. But how can utilities successfully transform their businesses and place their big bets for the future?
The customer is already digital
If you’re anything like me, you take digital paths and personalisation for granted. Netflix always seems to know what I want to watch. And Amazon remembers what I like to buy, and how I want to pay. Many of us consider ourselves digital customers by default, with few day-to-day exceptions.
And it stands to reason that as the energy transition gains pace, utilities will need to bring customers on a digitally-enabled journey to new services and solutions, delivered in new ways. This type of new service demands digital pathways, and that Neflix-esque personalisation many of us know so well.
Meanwhile, consumers are increasingly purpose-driven and receptive to services that drive decarbonisation. Our latest New Energy Consumer research shows 60% of consumers have become more aware of climate change since COVID-19 emerged, with more than half of consumers likely to invest more in energy efficiency today than before.1
But we also know there’s a gap between customers’ high expectations and energy providers’ performance in delivering offerings to them.2
So how can utilities choose what to pursue, and where to place the big bets?
Enter the digital energy service provider
To bring the customer along the decarbonisation journey, utilities can evolve from energy retailer to digital service provider. This requires connected energy services—future-forward products and services that tap into new and fast-growing profit pools, like energy management, distributed energy resources (DERs), eMobility (via electric vehicles) and flexibility.
And for utilities, the delta is big, with DER and eMobility projected (based on our modeling) to reach around €8 billion (about $9.4 billion) total annual new EBITDA in 2030 for key European countries alone (25% CAGR), while traditional commodity growth levels off at 1% CAGR.
For a real-world example, let’s consider on-site generation like rooftop solar and battery storage. Our research found a third of customers anticipate investing more in solar panels now than before the COVID-19 crisis.3 And that means utilities will need digital, for equipment referral and installation, operations and maintenance, among other things.
There’s also huge scope for creativity with these services (which again, demands more digital technology). Finnish utility Helen lets customers choose and rent their panel from a solar farm and use the energy it produces—overcoming the barriers to adoption for people in apartments with shared roofs, or students sharing a house. It creates a whole new commercial space for people who can’t put a panel on their roof to access solar, easily and conveniently. It’s so obvious when you think about it, but it takes a leap of imagination!
Demand flexibility: a tougher story to make simple
Solar and eMobility services are intuitively easy to understand. But energy management and flexibility can be a tougher story to articulate in simple terms.
Flexibility has traditionally been confined to industrial customers (B2B) with larger loads and the ability to modulate or turn off production at peak consumption times. But as the need for flexibility on the grid increases, and technology brings a new range of solutions to the market, there is a growing residential opportunity.
And customers may be more ready than you think. More than half of customers are interested in time-of-use tariffs/flexible tariffs/demand-response options post-pandemic to increase cost savings by shifting electricity consumption from evenings to daytime/nights.3
Digital technologies and the internet of things (IoT) are making this a reality. But where do utilities start? Once customers opt in, the focus should be on tapping into the most valuable flexible loads, primarily smart water boilers, smart heat pumps and smart charging for EVs.
Winning customer trust
All of these connected services open up mutually beneficial solutions for the future. But they require a leap of faith on the part of the customer. And that’s where customer engagement, education and trust will be essential—driving customer comfort with the process and understanding of the value on offer.
But it’s also critical to understand what customers want in terms of information. For example, when it comes to flexibility, our latest New Energy Consumer research shows that customers typically do not fully understand the value and mechanisms of flexibility, and are not really interested in them. Creating simple propositions that “hide” the complexity could help. For instance, customers could receive a simple rebate on their bills in exchange for allowing certain type of consumption control (within defined limits).
As these new services emerge, affordability is key—and alternative financing can help foster inclusion. This may particularly mean using “lease/rent” models for assets with high upfront costs, such as rooftop solar. Energy companies own the hardware assets and provide them to consumers via subscription—reducing the upfront capital required to participate. And all the while, utilities are creating entirely new revenue streams from monthly charging set-ups.
For energy companies, the inflection point is now, with digital technologies expanding the notion of what’s possible. Contact me to find out more about our New Energy Consumer research or how to become a digital service provider.
1 Leading Energy Transition in Tough Times, Accenture 2020, www.accenture.com.
2 New Energy Consumer: New paths to operating agility, Accenture, 2017; New Energy Consumer: Serving small and medium-size businesses, Accenture, 2019, www.accenture.com.
3 Accenture post-COVID energy consumer survey, June 2020.