Competitive Leadership Across the Five Waves of Digital Energy

By Mark Coyle

Technology is changing the way in which we purchase and engage in our goods and services.  From the internet and mobile applications through to connected speakers and social media, technology is the leading way in which we explore the choices, benefits and best pricing available to us. We all now act proactively to navigate our way through the options, compare and make an informed choice.  Sectors such as retail, travel, insurance, media and consumer goods are changing quickly through online providers without any government or regulatory stimulus.  The original incumbent brands are revitalizing for the future or new digital first providers are disrupting them.

Global governments designed our global energy markets back in the eighties and early nineties, reflecting the unbundling of an integrated sector into new roles.  These roles are consistent and still in place in all leading markets, with only the extent of unbundling really creating any difference in the role of energy retailer.  The energy Retailer role stretched forward to meet the needs of this first internet age, which was all about the power to choose a provider.  Choice was the defining goal of governments in competitive energy markets.  At first, this was through fixed line phone calls, letters and selling where people congregate such as shopping centres.  Over time, this transitioned to include price comparison websites, brokers and email.  The energy Retailer role went online but was mostly the same in pricing and service delivery.  This may not be sustainable in the next era where the role of energy Retailer itself will change with further technology waves. 

From empowering choice, the energy competitive model evolves to be all about leveraging the benefits of “smart” devices for the customer.  Across the world, technologies deployments of smart meters, sensors, real-time energy monitors through to in-premise energy production are in delivery.  These devices offer the first forms of connecting the customer and service providers in real time, which potentially transforms the experience between them.  However, with more data about consumption and in-premise production, it also introduces the opportunity for innovative tariffs that evolve with the market or grid needs.  Energy Retailers start to transition from a traditional utility provider basis towards becoming a technology enabled data insight service that focuses on how to deliver consumer benefit continually.  This allows new providers who are expert in how to create benefits from those technologies to enter the sector ahead of a growing opportunity that they feel best placed to deliver.

Connecting individual devices to the energy service is the start of a wider next shift towards pervasive “connectivity” across homes, businesses, markets, grids and service providers.  Homes are becoming increasingly connected already, as are the services that provide the energy to them.  Secure connectivity across and within these individual locations enables the integration of devices and locations on a distributed basis.  This enables the full integration of renewable generation at the consumer level and across communities, rather than just providing export into the primary grid.  New expert providers can aggregate and start to optimize the individual distributed devices to create new mutually beneficial services between the consumer and energy system in real-time. Our society is just at the start of this phase, with some customers and many providers looking forward toward the new opportunity.  As our society transitions towards electric vehicles, they become an integrated part of the connected energy era in combination with energy storage and the smart meters.

The integration of these distributed connected technologies enables a fourth phase for energy competition, where the focus evolves from visualizing and personalizing energy to optimise it for the consumer.  This is an era of energy “flexibility” where our devices are connected and can use energy in a way that benefits our society, reducing system stress and receiving associated financial reward.  Leading competitive providers will focus on automating our energy in a way that does not inconvenience us to deliver the right experience at the lowest overall cost.  This requires trust and expertise in secure technology by the new energy Retailers of the time.  At a point in our future, once the technology and optimization is in place at scale, our energy systems will automate how to achieve the right integrated benefits for all using artificial intelligence in the “autonomous” era.

Transport is already creating this phase even before it has transitioned towards full electrification.  If humans can envisage a new technology, we feel the need to start building it.   This is true for our energy markets where competition is no longer evolving incrementally, but is now about waves of overlapping innovation.  Today, competitive energy is evolving to meet the needs of our first internet age, soon it will seem as though all the waves outlined here are happening at once.  The opportunity and challenge for energy Retailers is to pick their path and customer focus areas through all this change.  Moving quickly allows time for experimentation to establish customer engagement with the right digital first culture.  In every sector, new digital providers are replacing the traditional incumbents.  While existing providers have customers today, these new providers have a clean slate and a digital first culture that may attract the customers to them. 


Mark Coyle is Chief Strategy Officer at Utiligroup, an ESG Company

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