April 6, 2016

Digitalization empowers a customer-centric energy industry

Cristina Petrescu

Executive Vice President, Public, Healthcare & Welfare, Tieto

Microgeneration, electric cars and smart homes—today these concepts may sound futuristic, but they may be fundamental to the energy industry in just 5 years. Environmental efficiency is a great opportunity for energy businesses to improve the lives of their customers—but this also places new demands on electric meters, power distribution grids and digital services. Looking into the near future, these are some of biggest opportunities.

Opportunity 1: Consumer control

Consumers are currently at the centre of the changing energy industry. To optimize their energy consumption, modern energy-conscious consumers demand the ability to monitor and control their energy anywhere and at anytime from their mobile devices. Simply put, today’s energy customer journey is heavily biased towards “digital first” features.

Most energy apps are however still in their “embryonic stage”—our mobile app offerings need to give customers more flexibility. For example, in mobile banking, executing transactions, managing accounts and even trading stock shares have been part of everyday life for a long time.

The energy industry should be aware of this consumer shift towards mobile devices. This is a huge opportunity to improve the customer experience management solutions. By effectively utilizing energy data, energy retailers can create personalized digital services for consumers.

Opportunity 2: Microgeneration & distributed energy generation

The consumer of the future will be a “prosumer”—i.e. both consumer and producer. The number of current prosumers is small, but rapidly increasing. Accordingly, the grid and energy markets have begun to adapt to this growth in microgeneration, the production of heat or power on very small scales from sources like solar panels.

This trend has shifted influence back to the customer. Distributed generation will foremost decentralize the energy industry, which could prove to be one of the largest disruptions in the industry that has been centralized the most over the past 100 years.

Microgeneration produces typically green power that is used where it is made, and often, the excess capacity can be sold back to the energy grid. This poses several important questions for the energy industry: If consumers turn into prosumers, what will be the role of energy companies?How can we support so-called prosumers in the future, while steering production and consumption? If we receive excess capacity, will it be possible to sell it? What kinds of services can be offered to enable this? Are still a customer one customer or are we talking collaboration and collectives?

The energy sector must consider another difficulty of excess capacity: If consumers produce more than they consume, what should they do with it? Most probably, consumers would want to sell surplus energy. But if others want to recharge the batteries of their electric cars at our homes, how will we charge for it?

Opportunity 3: Smart grid and grid management

The Nordic countries are forerunners in smart grid deployment and adoption—smart meters, appliances and control devices that provide utilities and consumers with much more granular data regarding energy consumption. The drivers behind this development range from environmental concerns to consumer demand for control and energy security.

Some smart grid components are already in wide use, but their full benefits are still underutilized. For distribution companies, smart grid transformation enhances network management, reliability and efficiency, which limits environmental impacts. 

Both consumers and customers benefit from increased control, while energy industry actors will be able to develop new business models that offer more tailored services and bundles by leveraging this incredible new data. Data about the customer is the most valuable business value that a current distribution company has, how to capitalize on that?

How can energy companies respond to these opportunities?

To provide more value to environmentally-conscious customers, you must be smart enough to innovate with the right partners. Embracing these new opportunities can add more value to millions of people in the Nordics. We must figure out how to work together to improve the lives of customers and consumers.

This ongoing revolution is notably about digitalization, modernization and automation. Data-driven businesses will harmonize and consolidate systems and applications, while expanding the flexibility and range of products and services available to modern consumers as we discover new ways to utilize energy more efficiently.

As such, co-innovation with both partners and end-users engaged in mature ecosystems is especially important. The energy market is changing in new and exciting ways and beginning to address our mobility needs. Today, it is easier than ever to move among cities and countries without worrying about electricity suppliers. Offering potential consumers the services they want and need will allow energy companies to expand market share in this challenging industry.

But what will the next steps be? Ultimately, consumers will decide. And you need to listen to them.

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