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European Utility Week 2019: The Energy Transition Is Happening in Customers’ Homes – Are Utilities in Control?

With Europe becoming the pioneer of energy transition, the European Utility Week (EUW) has evolved from a classic industry trade fair to a hotbed of energy innovation and thought leadership. This year’s Parisian event was no exception, with the emphasis on the transition bigger and bolder than ever before.

Let’s define energy transition as the process of decarbonising energy production while electrifying energy consumption (space heating, transportation, industrial loads, etc.). It’s easy to see how much of this process is driven by the end users — the amount of energy generated behind the meter is growing, as are the number and variety of energy devices and the size of loads. In fact, 45% of annual battery capacity additions are already behind the meter today. By 2040, distributed systems will account for more than 40% of total PV installed capacity worldwide and buildings will represent over 54% of all electricity demand growth (for heating, cooling, lighting and appliances). The question for European energy utilities is: can you see, and respond to, what is happening in customers’ homes?


Customers Are Still Missing Out

Someone I bumped into at EUW told me she’d recently bought an electric car. She was visibly excited about finally being able to make the change, but her delight, she said, had turned sour as soon as she got in touch with her electricity supplier. For starters, she was given no support in selecting the best EV model based on her consumption profile. More importantly, she was given no visibility on her prospective cost to charge and was not offered a dedicated tariff or charger. She was also given no idea about how to optimise her charging schedule or about the revenue she could have made on the side (for example, through flexibility services) that would help her to reduce the total cost of owning her new car. Even worse, weeks after she’d bought her EV, her utility was still in the dark about her new “load”.

Is this a case of unrealistic customer expectations? Or just a customer experience horror story? A bad apple or proof that traditional utilities can’t serve the new energy consumers? Either way, European utilities need to act, and act fast. IDC Energy Insights believes it won’t be too long before it is cheaper for the average consumer in Europe to generate and store their electricity locally than to buy from the grid — within three years, in fact. New entrants — many of which don’t have a legacy commodity business to defend — will leave no stone unturned. By pooling EV batteries and using some of their capacity to offer grid services, for example, my friend’s car OEM could offer her months of free charging. Scary, isn’t it?


Yet the Stars Are Aligned

Every single energy retailer I have spoken to feels the urgency to move past the “electrons” business and become an enabler of the energy transition for their customers. What they often forget is that they already have much more of what is needed to better understand their customers. This includes energy usage, customer interaction and key demographic data. Digital tools are available to “see” behind the meter at an increasingly granular level, empowering the customer with the right energy equipment and service at the right time. For example, for my friend who just bought the EV, a data-centered retailer could immediately identify this new load, educate her on the impact of the EV on her bill, and help her make the right tariff and charging decisions.

Personalising customer experiences will not only benefit energy customers but also generate business and environmental value through higher customer retention, new revenue creation, better energy awareness and a faster path to zero carbon.


The Plan

Here’s a five-point data-driven action plan to help energy retailers regain customer mindshare:

  1. Get customers’ consent to use data from smart meters for added-value services — it’s gold.
  2. Move from segmentation to hyper-personalisation:
  • Understand what type of customer you’re dealing with:
    • “Green”: Are they willing to go the extra mile to reduce their carbon footprint (maybe they’re buying an EV or already own solar)?
    • Cost conscious: Are they looking to save on their energy cost?
    • Comfort and convenience: Don’t forget there are people who care very little about energy. But there are ways to please these customers too.
  • Understand your customers’ behaviour: Who are they? How and when do they consume energy? What kind of demography and lifestyle profile does this suggest?
  • Understand your customers’ energy ecosystem: What loads do they have? Have they bought an EV? Have they converted some of their thermal loads to electricity? Is there a better tariff for them?
  1. Serve a customer base of one: Empower your customers with personalised energy insights and build dedicated customer journeys around them.
  2. Make the journeys dynamic and interactive over time: Be ready to adapt as your customers’ behaviour changes and evolves.
  3. Think big: Start small, but once value is proven, scale fast. In the age of AI, data abundance will only make your insights sharper and your services better.

Remember: if energy retailers don’t get there, someone else will.


Guest Author: Jean-François Segalotto, Associate Research Director, IDC Energy Insights 

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