The power of data will be a game-changer for energy and utilities consumer relationships. Here’s why.

What does the future hold for the customer relationship?

We find ourselves at the start of the biggest customer-driven transformation any industry has seen. Access to affordable generation capability and storage (including electric vehicles), combined with the digitally enabled smart evolution, sees consumers exploiting their energy assets using apps and simple home technology. Customer engagement in the energy market is growing and coffee shop conversations about solar, batteries, and heat pumps are now commonplace.

Clearly cost and environmental concerns will play a role in any customer relationship, but there is now a plethora of solutions in the customer home. We have apps for electric vehicles (EVs), apps for solar and storage, home management apps for lights and plugs. These have largely been sourced piecemeal by customers who are now beginning to recognise the benefits of bringing them together into a home energy service.

This transformation is happening so rapidly that energy retailers have been slow to respond, partly held back by a set of industry processes and regulation defined before the digital age and partly by the wafer-thin margins in energy retail. However, new entrants are seizing this lack of pace as an opportunity. EV manufacturers are entering the energy retail space with unified smart energy solutions encompassing home control and energy optimisation across all assets – for example, Tesla’s Solar Neighbourhoods.

Installation, maintenance, and gleaning insights from these assets is all new to many energy retailers, leading some to subcontract out the responsibility – potentially damaging their brand image whilst brand awareness and brand perception of EV firms rise. Though the energy retail side might have little in the way of asset management and optimisation experience, it does have another, arguably more valuable asset: data.

The smart data opportunity for utilities is immense. Retailers have access to internal and external data on customer behaviour and propensity to buy that should give them an advantage when targeting customers for new propositions. Partnerships might still have to be made to deliver the asset installation, but entering these relationships as a partner and not seeking an outsourcer will surely be more profitable.

How can the energy and utilities sector rise to the challenge?

Disintermediation of the customer relationship for energy retailers by new entrants is a real possibility and the ‘secret sauce’ for future success must come from exploiting data. The smart revolution has given utilities players access to frequent data points, not only on energy consumption, but on asset status (e.g. charged, on, off, usage). Taking these data points into a Customer Data Hub, applying analytics (and AI) yields massive value-opportunities for revenue and profit maximisation. Equally, it offers customers the chance to benefit from a single service provider across energy, mobility, and home services.

We saw similar challenges and opportunities arise when the telecommunications/home entertainment industries digitalised in the early part of this century. Many legacy players were badly impacted and new ‘data-centric’ players emerged.

Exploitation of data will be key for any business to survive and, importantly, thrive. The power of integrated data analytics and insight will be the game-changer and Capgemini’s Augmented Customer Experience offer enables energy retail players to become energy services companies though the creation of AI solutions over a Customer Data Hub. We have examples of clients who have benefitted from 30% increase in average revenue per customer and 50% operational costs reduction through AI and data mining.

Digital thinking will be foundational for successful energy and utility companies in the next 20 years. The wealth of opportunity is evident by the number of startups addressing issues with point solutions across the ecosystem. Bringing several of these solutions together into a more integrated or end-to-end service will surely meet the customer aspirations of buying cheap, green energy, and making the most of the assets available.

We predict a future where the customer is less engaged personally, reliant more on a few core companies to optimise asset usage and exploit personal and local community data. Most EV users would like a service which charges their EV when prices are low or even negative, discharges when demand is high, and leaves the vehicle with enough charge to get to their destination. Individuals want a service which ‘banks’ their solar power in an ‘energy cloud’ for use later. A service which reviews asset performance (including white goods) and recommends when to change these based on a clear business case.

All this is possible today, but who will bring it all together first? The energy retailer, the EV manufacturer, or the white goods company?

How can Capgemini help your business?

Capgemini is a leading business and technology transformation partner for energy transition and utilities, working with organisations around the world to chart a course toward the future they want, and the planet’s needs.

We can help you take a comprehensive and holistic approach to transformation, focusing not just on building a strong technological foundation and on scaling use cases, but also transforming the business itself and navigating the challenges that come with fundamental operational change. We’ll help you adopt an end-to-end digital mindset, maximising the power and impact of automation, artificial intelligence and machine learning. The results? Significant improvements against KPIs – from enhanced customer engagement, satisfaction and retention to productivity and bottom-line profitability.

For more information contact Carl Haigney and connect on LinkedIn.

Coming up in the ‘Future of’ series…

Throughout these blogs, we’ll explore how digital technology is revolutionising the way utilities operate – providing a snapshot of what is already being achieved, enroute to a fully connected and optimised business model. Stay tuned for more insights, expert opinions, and actionable advice on issues like the hyper-personalised energy class, how to collaborate with your consumers to dive meaningful change, and how to foster a digital culture.

Explore our ‘Future of Series’ blog page, click here to learn more.