By Yun Zhi Lin, Chief Innovation Officer, APAC, at Contino
Energy companies have long been defined by the slow-moving nature of the utility sector. Minimal consumer-facing innovation has meant energy understanding is back of mind for most Australians, with National Energy Resources Australia citing no improvement to energy literacy over the last decade. However, with our energy sector set to become the first utility industry in the world to experience data sharing thanks to the introduction of the Consumer Data Right (CDR) in the National Electricity Market, there is a prime opportunity for product innovation and market disruption to fuel competition and increase energy literacy.
The Australian government has committed to extending the CDR to the energy sector alongside the implementation of open banking. ‘Open Energy’ will establish a framework to help consumers find and switch to the best energy deals. Under the proposed ‘gateway’ model for the scheme, the Australian Energy Market Operator (AEMO) will act as an intermediary to facilitate data transfers between data holders (i.e. consumers) and data recipients (i.e. accredited third parties) on demand. Over time, this will encourage greater competition in the sector and deliver innovative products that increase consumers’ energy literacy by helping them to make informed decisions about personal energy investments.
The innovation race
In order to succeed under the CDR, energy companies must become fiercely proactive in their digital transformation strategies in a coordinated effort across all tiers, including retailers, distributors and smart metering providers. Smaller businesses, like startups and challengers, have the benefit of addressing these regulatory needs at a lower cost with fewer resources, whereas traditional energy providers may find themselves anchored by legacy infrastructure and protocols.
Speed to market will become critical for industry leaders when releasing products that prioritise consumer needs such as cost savings, sustainability and energy sources amid the rapidly evolving market and regulatory forces. As such, CDR participants must take this opportunity to future-proof their technical infrastructure.
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Customers are the centrepiece of the CDR and this must be reflected by prioritising end-user needs in an open energy transformation strategy. Mass market offerings will decline while demand for tailored products will increase, which will require the right application programming interfaces (APIs) and technical infrastructure (such as a robust data platform) to support evolving data regulation and hyper-personalised customer experience.
For effective end-to-end management of a CDR strategy, energy organisations should assemble multidisciplinary teams to mitigate unexpected challenges in the best interest of all functions. Ultimately, the greatest impact of the CDR is the necessity to collaborate, an ability that will make or break the success of a CDR participant.
The rise of cross-vertical digital marketplaces
As the CDR rolls out across Australian industries, the aggregation of available consumer data has the potential to lead to a next-generation, cross-vertical digital marketplace. With increasingly personalised offerings, why not take full advantage of the available CDR data–that is, from all participating sectors such as banking, energy, telecommunications and more–to form tailored cross-vertical offerings, partnerships and realise new revenue streams? For instance, 86 400’s Energy Switch delivers electricity offerings through its banking application by analysing individuals’ bills, encouraging customers to optimise their spend with deals they otherwise might not have been aware of.
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Providing a superior customer experience by reducing friction with hyper-personalised goods is the key to success in a data-sharing world where traditional product boundaries are blurred and new alliances are formed. But this must first be empowered by an agile API-driven architecture that can withstand unpredictable market forces. Hence, in addition to implementing APIs and cloud-based infrastructure (which is essential to ensure flexibility, scalability and speed to market), energy providers must invest in a rich developer experience for a self-sustainable API management solution where developers can feedback and collaborate efficiently. Getting the foundation right should be the first step in any open energy transformation journey.
It’s fair to say if the energy sector was looking for a shakeup, this is it. The CDR has presented the chance for energy companies to become more than just utilities, but rather, innovators and collaborators. This is a new era of market competition.
Yun Zhi Lin is Chief Innovation Officer, APAC, at Contino, a global consultancy that helps energy companies achieve measurable transformation through the adoption of DevOps, cloud-native computing and data platforms.