Utilities that have deployed smart meters are now awash in terabytes of valuable consumer data. According to Accenture estimates, in the United States, 2.8 billion data points are captured on a daily basis including energy usage, customer move-in/move-outs, payment/service history, and utility-program participation. This data can pave the way for future utility insights, but can also enable an emerging market for other companies looking to offer new energy-related products and services to consumers.
There are two distinct utility data offerings and associated “use cases” that can be considered: (1) utilities offering anonymized customer data to companies that are researching or designing new energy-related products and services and (2) utilities (with customer permission) offering specific customer data to enable other energy-related companies to explicitly target new customers. Accenture estimates these markets in the United States to be worth $1.3 billion and $3.3 billion, respectively.
Today, smart meter data and the resulting insights help utilities improve customer satisfaction, grid reliability and performance, and potentially personalize consumers’ experiences with suggestions on new utility-offered products and services. However, this utility data is also valuable to other third-party companies interested in gaining a deeper understanding of their own customers’ behaviors and preferences. For instance, sellers of rooftop solar arrays, fuel cells, demand-response aggregators, connected home product providers, and other aggregators of consumer data could all be potential buyers of utility customer data.
There’s nothing new or revolutionary about monetizing data. Retailers, credit card companies, media agencies, insurance providers and others have sold packaged customer data for years. Over the past five years, estimates have shown that “data brokering” has grown from a $150 million industry to over $200 billion today. Companies such as MasterCard and Walmart have added “data sales” services as growth businesses beyond their core business.
Yet, among utilities, only a handful of executives are seriously considering how they, too, might use their data as a source of new revenue. Their hesitancy is understandable. After all, there aren’t yet any industry leading practices to follow, there are likely to be regulatory hurdles—particularly with respect to consumer data privacy. And there is a need to maintain airtight security of customer data.
While there are certainly challenges to address, the upside revenue potential for utilities is simply too great to deny. But interested industry executives should not wait to make their move into data monetization. If they delay, others will likely step in with “web-scraping” techniques to pull data from recognizable utility sources. These data competitors will, in effect, push utilities aside and steal their data potential. That translates into millions of dollars down the drain.
It’s important, therefore, for utility leaders to start thinking about four things:
By understanding these aspects of data monetization and the potential impact of data monetization on the business, utility leaders will be more strongly positioned to capture new revenue streams. They will be the ones to lead the next phase of the industry’s evolution by pivoting from a revenue model based entirely on regulated rate base and usage to a model that is grounded in the delivery of valuable and differentiated products and services.