Reinventing customer service through digital innovation
Energy solution integration is expected to be worth $141 billion, with significant value to be captured by integrating renewable energy resources.
As electricity companies adopt integrated customer services, they will move from being ‘energy-centric’ to ‘customer-centric’, using increasing volumes of customer data to better understand consumer behavior. A tremendous opportunity exists to develop innovative digitally enabled products and services, bundled to provide an integrated customer service. Energy companies will start to play a bigger role in how consumers optimize the home, choose tariffs, manage consumption and payments, and embed self-generation.
Consumers are starting to expect choice, reliability and personalized service that extends beyond the meter (see Figure 1).
A growing number of blue-chip vendors, such as Apple, Google, Samsung and Verizon, are partnering with incumbent hardware and software providers to develop an integrated customer service. These players are well-positioned to offer a seamless consumer experience across channels, and are challenging the traditional utility-customer model.¹
Digitally engaged customers have higher potential value to utilities, as they are more likely to participate in energy management programs and to trust – and be satisfied with – the service they receive.
Success in this market will be driven by the ability to provide customers with solutions that give them the flexibility to control, monitor and switch between different energy sources. For example, Solar City, which leases distributed assets without down payments, makes the adoption of solar straightforward and affordable. Accenture’s New Energy Consumer research of 2015 found that, while only a handful of respondents (9%) had solar products in 2014, 55% were considering purchasing or signing up for solar in the next five years.² The sharing economy will boost the democratization of energy sources, with neighbors or local businesses connected on a platform to buy and sell power from each other, matching supply with demand on a micro scale.
Integrated customer services also relate to how energy technology companies are empowering businesses to self-generate, participate in demand response programs and take a data-driven approach to managing consumption. A number of energy technology players, such as Silver Spring Networks, AutoGrid, Tendril, Opower and Hitachi, to name a few, offer a data management platform that encompasses these benefits. These companies are capturing value by running analytics on an increasing volume of smart meter data points to deliver energy management insights in real time. Some players, such as Comverge, Enablon and C3 Energy, also employ insights from behavioral science to encourage energy users, through interactive portals and personalized tips, to reduce their consumption and improve energy efficiency.³
Finally, integrated customer services offer electricity companies an opportunity to better segment their B2B or B2C customers, resulting in a brand ‘stickiness’ that has been nearly impossible to achieve to date. Add-on services present a new revenue stream that will help overcome the risk of a low-profit, low-growth market. A number of energy technology players have emerged that are partnering with utilities to offer a compelling suite of energy management services.
We focus on four digital initiatives below: energy storage integration, energy solution integration, energy management and the digital customer model.
Integrated customer services is one of four themes that we believe will be central to the digitization of the electricity industry over the next decade. The other themes we examine are asset life cycle management, grid optimization and aggregation and beyond the electron.
Energy storage integration
Technology solutions that enable integrating energy storage devices into the grid, including those in a domestic setting, are the focus of this digital initiative. Energy storage integration, worth a projected $130 billion for the industry, is significant because of the value at risk from migration to new entrants, and the potential for pass-through margins from the sale of storage units to existing customers.
The current utility business model will change with the ability to store electricity that is produced when it is not needed, and discharge it when it is, at scale. Through economies of scale and innovative manufacturing processes, lithium-ion battery prices are declining, a trend that is set to continue. Players such as Stem have emerged to dramatically improve energy efficiency by combining big data, predictive software and batteries to learn customers’ energy profile.⁴ Stem’s solution provides capacity to the grid when demand is peaking; with this approach Stem has won an 85-megawatt distributed storage contract with Southern California Edison to provide capacity to the grid in the West Los Angeles area.
Energy solution integration
Branded solution integrators will provide new services that will help customers not only optimize energy production and use, but also allow for greater control and cost savings. Energy solution integration is expected to be worth $142 billion to industry, with significant value to be captured by developing plays in integrating renewable resources. Customers could also realize value of $27 billion from the higher savings that these solutions provide, offsetting the higher unit cost of energy.
PowerShop is an integrated energy solution provider, offering consumers the ability to view, monitor and purchase electricity online, on mobile and via social media. Launched in 2009, the disrupter offers a differentiated, modern service by providing convenient, cost-effective and personalized access to energy packages at a range of price points. From their smartphones, customers can monitor home energy consumption and choose the source of their electricity, such as from alternative energy projects including wind, solar or landfill generation.⁵
This digital initiative will see prosumers provided with the energy information displays and controls they need to manage generation, storage and flow. Energy management is estimated to be worth $70 billion to industry; utilities must act now if delivering on-site energy management is to be an attractive business model. Customers could realize up to $32 billion from lower costs and re-selling excess energy back to the grid. Carbon emissions are expected to reduce (530 million metric tonnes) from higher adoption of renewables.
E.ON is an integrated utility that differentiates through value-added services for its B2B customers. E.ON provides an end-to-end service that integrates energy efficiency solutions, on-site generation and flexible solutions. On the supply side, electricity can be generated directly at the client’s site, supported by a virtual power plant, with communication triggers back to the trading team to trade oversupply at optimum times. On the demand side, its energy management capabilities include online reporting of live energy usage, identifying and implementing energy conservation measures, and designing and installing larger capital investment projects.⁶
Digital customer model
Customers will increasingly interact with their electricity provider through multiple channels, including Web, mobile and social. The customer interaction model will be transformed through embedded customer analytics within services that accelerate digital migration and improve customer engagement. Total value realization for industry could reach $93 billion, with higher savings offsetting the revenue lost from lower consumption. Consumers could save on their electricity bills, from closer monitoring of their consumption and billing patterns; expected benefits total $140 billion. Lower carbon emissions (172 million metric tonnes) provide additional benefits to society.
To appeal to the UK rental market, Centrica/British Gas developed its Me app to allow users to predict bills and split payments with housemates.⁷ In the future, add-on services may include the ability to compare the consumption of people residing on the same street, and integrate with remote temperature controls and smart meters. Utilities will be able to move from supplying a commodity to providing an experience, better meeting consumer needs and improving brand stickiness. Consumers will also be able to determine their electricity mix, reduce usage and drive efficiency.
1. Accenture, The New Energy Consumer: Unleashing Business Value in a Digital World, 2015.https://resapps.accenture.com/newenergyconsumer/unleashing-business-value-main.html
3. CleanTechnica, op. cit. http://c1cleantechnicacom.wpengine.netdna-cdn.com/files/2015/03/GTM-12.jpg
4. See: Stem.com http://www.stem.com/
5. Accenture, The New Energy Consumer, op. cit. https://resapps.accenture.com/newenergyconsumer/unleashing-business-value-main.html
6. E.ON Connecting Energies, E.ON Connecting Energies: Connecting you to efficient energy solutions.https://www.eon.com/content/dam/eon-content-pool/eon/company-asset-finder/company-profiles/ect/Connecting_Energies_Brochure.pdf
7. Chapman, M., “British Gas launches Mobile Energy brand to tap into young house sharers”, Marketing, July 22, 2013.http://www.marketingmagazine.co.uk/article/1192100/british-gas-launches-mobile-energy-brand-tap-young-house-sharers
Electricity is one of six industries (along with automotive, consumer, healthcare, logistics and media) that have been the focus of the World Economic Forum’s Digital Transformation of Industries (DTI) 2016 project. An overview of the DTI program can be found here.
Our in-depth findings about the digital transformation of the electricity industry are available in a white paper, which can be downloaded here.
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