One theme that underlined this year’s European Utility Week held in Barcelona, Spain, is that the industry is undoubtedly undergoing a significant transformation. Shifting international regulatory policy, hordes of actionable data and an increasingly connected consumer base are just a few of these driving forces.
But perhaps the most pressing factor of all is the question of power. Not in an atomic sense, but in terms of the relationship between utility provider and consumer; it’s definitely shifted to the latter.
This bottom-up, consumer-driven digital transformation is made possible as consumers now have a choice.
Take gaming giants MGM Resorts Ltd. for example. In early May this year they decided to exit the Nevada Power grid and purchase their energy on the wholesale market. Why is this so significant? Well, it didn’t come cheap – it took a small fee of $86.9m in order to make it happen. With consumers willing to pay such huge exit costs to defect from the grid it’s clear utility providers will have to adopt to survive. If not, people will and are finding alternative methods in sourcing their energy.
So why this sudden change in attitude?
According to Bjorn Bekkenvold, CEO at energy disruptor XTEN Group, high prices caused by duties on certain, traditional energy forms has angered many customers. Combine this with technological improvements in battery aggression, falling costs of solar PV and increasing environmental concerns and we start to see the reasons for this defection.
Vassilis Nikolopoulos, CEO at Intelen confirmed this in his talk “How Utilities Will Generate New Revenue Streams Using Data-Drive Engagement,” customers no longer just purchase energy from their utility providers, but can install their own solar panels, store it with new battery technology and share and sell their energy as prosumers.
There are already a host of start-up enterprises looking to fill this new economic void. Lars Falch and co-founder Michael Ooms launched PowerPeers in 2014 as a decentralized alternative to energy consumption. The community based platform allows users to choose their energy supplier whether it’s from an offshore wind farm, individual supplier or even a friend. It has a social aspect to it too, with users able to see who’s supplying their energy and what their background story is.
By giving consumers the ability to pick and choose from an “energy mix” which fits both their individual values and pricing points, off-grid models are providing economically viable alternatives to compete with the traditional market.
In order to avoid the utility “death spiral” Nikolopoulos suggests providers evolve into data aggregators and start dealing in the 21st century currency.
With the introduction of smart meters and appliances utility companies can provide end users with something interesting, differentiated and with real value. By piecing together aggregated data on insulation, age of house, electrical appliance consumption, components etc. sales reps could approach customers with a tailored proposal, specific to them. “Did you know that by switching to X system you could save Y amount based on the information (or even from a predicted physics model) we have on your current household?”
As Jon Slowe, Owner at Delta Energy & Environment pointed out in his talk “Customer Data Analytics across Europe,” it’s vital utilities start using data to make smarter sales choices. “For example, dog owners are more likely to invest in solar energy than cat owners…an insight that only gathering and crossing data could show you.”
This is also where a mobile CRM plays a key role. It can inform sales reps of when the customer was last contacted, by who, the nature of the call/visit and what their current situation is with the provider. Furthermore, CRM integration with your ERP or other data aggregator can provide sales reps with all the information mentioned above, pinpointing areas for potential cross-sell with a tailored follow-up call or visit.
While this transformation poses serious challenges for the utility industry, it’s definitely not all doom and gloom. With the help from this data bank companies have the flexibility to offer customers what they want, monetize this new digital offering and still reduce our carbon footprint across the planet.