Energy providers are operating in an entirely new world, where everything and everyone are increasingly connected. Here, energy consumers are embracing innovative technologies and taking on new roles as both buyers and sellers of energy. ES&D catches up with the researchers behind Accenture’s annual consumer research program to hear how utilities can become more innovative and agile.
In The New Energy Consumer: Unleashing Business Value in a Digital World, Accenture shares the latest results of its multi-year New Energy Consumer research program. The findings reflect more than 11,000 interviews with homes and businesses in 21 countries, and point to growing opportunities for forward-thinking energy providers.
This year’s report centres around digitally engaged consumers, a group Accenture defines as people who have interacted with their utilities online at least once during the past 12 months. There’s a good reason the research focuses on web and mobile interactions; digitally engaged customers are more valuable customers, according to the research. Accordingly, utilities that can move homes and businesses to online self-service will reap the rewards, from higher satisfaction and loyalty, to lower service costs and new revenue streams.
Forces shaping the energy marketplace
As consumers’ values and preferences evolve, utilities must be ready to respond to four forces reshaping markets around the world, according to the report.
Energy providers are surrounded by change, from rapid advancements and widespread adoption of distributed generation and smart technologies to product innovation, game-changing partnerships and converging markets. At the same time, consumers’ values and preferences continue to evolve.
While market conditions vary by region, every provider needs to take deliberate action – embracing a bold vision and reformulating strategies for understanding, reaching and engaging energy consumers.
“As part of our latest research, we’ve identified four key forces shaping the energy marketplace: connected everything, personalised energy, asymmetric competition and shifting regulatory frameworks,” Accenture energy consumer services managing director Tony Masella says.
“With increased connectivity, access to energy everywhere is becoming top of mind for our consumers and unlocks new opportunities for energy providers, from the increasing adoption of solar panels and electric vehicles to the emergence of microgrids. Even retailers are getting into the act.”
What’s more, Tony says utilities now face competition from all directions, being challenged by start-up digital retailers, telecoms giants, prosumers and incumbent utilities with core energy and new products and services.
“This asymmetric competition can be both a threat and an opportunity as it creates a market for new products and services that incumbent utilities can launch,” he says.
Unlocking digital value
Utilities can seize the value of digital by transforming core customer operators and deploying digital customer technologies, according to the Accenture report.
Digital is changing the nature of consumer engagement across the customer life cycle. Whether to educate consumers, sell new products, encourage self-service or create value with new services, digital must be considered as part of every initiative.
For Accenture Innovation Centre utilities director Naomi Manley-Casimir, now is the time for energy providers to take a strategic, systematic approach to transforming their operations so they can unlock the value of digital energy consumers.
“Even as digital reshapes consumers’ expectations of their experiences, getting the basics right remains key to enduring success,” she says.
“In our 2015 research we explored how to unlock the digital value of consumers. And the results revealed digital energy consumers can unleash significantly more business value for energy providers than those who do not use digital channels. They have higher trust. They are more satisfied. They are more likely to recommend. They are more likely to participate in programs, and they are more likely to sign up for products and services.”
For example, they have higher trust, with Ms Manley-Casimir saying 41 per cent of digital consumers state they trust their energy provider to help them optimise their energy consumption, versus less than a third of non-digital users.
“From a satisfaction standpoint,
69 per cent of digital consumers indicate they are satisfied with their energy provider – that’s 14 percentage points higher than those who do not use digital channels,” she says.
“And when it comes to signing up for energy-related products and services, 70 per cent of digital consumers say they would sign up, compared to just less than 50 per cent of non-digital consumers.”
Extending the value proposition
It’s time to unlock the value of a new energy marketplace reinventing the value proposition and launching new products and services, according to Mr Masella.
As adoption of rooftop solar and other distributed generation technologies increases, consumers’ knowledge and interest in home energy management solutions are on the rise. Energy providers have the opportunity to forge new paths to value by expanding their portfolio of products and services.
“Digitally enabled consumers have a higher interest and likelihood to be first movers and acquiring their share of spend is pivotal,” Mr Masella says.
“In competitive markets, digitally enabled consumers are key in the hunt for value and additional revenue. In regulated markets, these consumers offer prime opportunities to engage around energy management. “As consumer interest and propensity to purchase energy-related products and services grows, energy providers have the opportunity to realise new value.”
Seizing the digital energy platform (r)evolution
Accenture’s research is clear on the notion the future is about digital industry platforms and ecosystems that fuel breakthrough innovation and disruptive growth for utilities.
While product and service opportunities abound, the future will not be about a single product, process, service or solution. Rather, Accenture Energy Consumer Services managing director Europe, Africa and Latin America Wytse Kaastra says it will be shaped through digital industry platforms and ecosystems that fuel breakthrough innovation and disruptive growth.
“What we are seeing these days is utilities are really struggling with their business models. Where they used to earn a reasonable amount of money selling electricity to the end consumer, that model is increasingly at stake; certainly in Europe where the traditional sources of money are gone or at least diminishing,” he says.
“At the same time, we are seeing new types of consumers – the prosumer – producing their own energy. And also what we see is the emergence, or rise, of new technologies enabling all kinds of new models.
“What we have seen in other industries is like the taxi business with Uber, or the hotel and rental business of houses with Airbnb, and I expect to see similar plays in utilities, at least in the deregulated markets like Europe and Australia.”
Combining new technologies and a shifting economical system of utilities is fuelling these types of new developments and new platform plays, according to the report, with Mr Kaastra adding it’s also about daring to attack your own business model.
“Because if they do not do it themselves, others will,” he says.