Energy providers around the world are facing squeezed margins, game-changing technologies and asymmetrical competitive threats. They know it, too. In Accenture’s latest Technology Vision research, 82 percent of utilities that Accenture interviewed agreed: Their companies are increasingly pressed to reinvent themselves—and evolve their business before they’re disrupted.
Does that mean it’s all doom and gloom for the future? Hardly. Those that thrive will work—and, in many cases, are already working—to transform current challenges into equally vast opportunities.
When rethinking and reshaping a utility customer business, at Accenture, we believe energy providers must respond to three broad forces: infinite disruption, marketplace volatility and regulatory reimagined. Here’s a quick look at each.
New technologies are enabling everything from effortless payment options to robotic switching and personalized energy solutions. Meanwhile, as digitally enabled platforms take hold, we’re seeing the emergence of new ecosystems that don’t adhere to traditional industry boundaries. For evidence, look at Uber. First it built a platform that disrupted the taxi industry. Now it’s using that same ecosystem to pilot UberHEALTH for on-demand delivery of flu shorts and other vaccinations. Which hospital or pharmacy chain would have ever considered Uber as a potential competitor? And yet, that kind of disruption should no longer come as a surprise. Successful energy providers are embracing digitally enabled platforms—for consolidating new approaches to distributed energy resources, monetizing distributed energy and connected home data, delivering bundled services for the connected home and more.
The traditional cost-revenue model is being destabilized. Utilities increasingly face a world where overall load is reduced—but peak demand isn’t. At the same time, long-term economic forecasts suggest we’re in for continued, and often unpredictable, swings in the energy market. Stagnating real incomes are driving consumer focus on how much they’re spending on energy. And while technologies such as electric vehicles could become one driver of demand growth, it could seek to exacerbate peak demand challenges.
This ups the ante in terms of increasing customer engagement, as well as deploying advanced tariffs, automated home energy management and demand response to optimize peak load. In the face of so much volatility, leading energy providers are crystallizing a renewed strategic viewpoint toward customer as a strategic lever for the entire value chain.
As the world keeps changing, regulators are working hard to keep pace by achieving further network efficiencies, integrating renewables and distributed technologies, and tackling affordability. Although each market has distinct nuances, some commonalities have emerged. Perhaps the most pressing: the growing power of the consumer to influence and incite the energy marketplace. For many energy providers, consumer-oriented regulatory shifts will demand nothing less than a new operating model.
The forces of change are shaping the future. Each utility has the power to choose whether the forces will prove detrimental—or instrumental to a new and brighter future. To learn more, explore The New Energy Consumer: Thriving in the Energy Ecosystem. Check back soon for a closer look at the consumer trends that are creating challenges and opportunities for energy retailers.