Have utility companies figured out the new-age consumer?
THE advent of prosumers (energy producing consumers) is the most significant disruption in the utility sector, driven by energy technology consumerization.
Truth be told, the influx of technology from the consumer marketplace is forcing utility companies to be more nimble in supporting unplanned-for technologies that are outside of their control.
“Energy technology consumerization disrupts existing utility business models and creates new opportunities in key utility business processes,” said Gartner VP and Distinguished Analyst Zarco Sumic, in an exclusive interview with Tech Wire Asia ahead of his speaking engagement at the Gartner Symposium/ITxpo 2018 event.
Examples of consumer energy technology include smart thermostats, rooftop photovoltaic (PV) systems, microgrids, electric vehicles, and energy storage.
These exponential technologies result from innovation at the edge of the grid, outside the boundaries of the traditional utility business.
Consumer adoption of energy technologies impacts all utilities, but the intensity of the trend is uneven.
According to Sumic, the factors elevating the trend’s importance include regulatory environments that are favorable for renewable energy adoption, including the presence of subsidies, socioeconomics (such as affluent customers investing in technologies like electric vehicles) and cultural factors (such as consumers who want sustainable lifestyles).
Consumer adoption of energy technology is also changing customers’ relationships with their energy suppliers.
Customers are moving from being passive payers of monthly bills to being more proactive and engaged in energy consumption and production.
The ability of utility providers to create customer profiles that include data about customers’ energy technologies is valuable for a range of pursuits.
Some examples are better customer service, evaluating opportunities to create innovative service offerings (such as microgrids and fast electric vehicle charging stations), and tariff planning and development.
“In the longer term, consumer adoption of energy technologies will enable energy provisioning transformation, and drive opportunities for utilities to transform into digital businesses,” suggested Sumic.
Consumer energy technologies also create opportunities for new providers to enter energy markets, and for existing energy service providers to grow.
Many of these players have a direct interest in energy consumption data, thereby creating a need for data governance policies such as sharing customer energy data with third parties.
It also creates a need for data integration between consumer technology and other utility systems.
Using technology to serve and support
In the customer domain, opening new digital interaction channels and providing customers with an up-to-date insight into emergency restoration activities are examples of digital initiatives that contribute to operational excellence and cost optimization.
In terms of customer energy technology, only a limited number of utilities have created successful offerings.
The vast majority of customer energy technology is purchased by customers, provisioned by consumer technology mega-vendors (Google, Apple, Samsung, Tesla) and installed by third parties.
This creates interoperability challenges for utilities seeking integration of demand response and grid services, such as tapping into smart inverters or energy storage batteries for voltage regulation.
Utilities’ initial reaction to energy technology consumerization was to go beyond the meter and offer their own “brand” of consumer energy technology solutions.
“However, the battle for the connected home and consumer energy technology has been won by consumer technology mega-vendors,” Sumic pointed out.
Consequently, instead of peddling their solutions, utilities should consider becoming part of the consumer technology mega-vendors’ ecosystems.
By leveraging connected home APIs and/or digital assistants, utilities can address interoperability complexity and concerns.
“Utility CIOs who are focused on transforming into a digital utility should prepare for continued energy technology consumerization by accelerating investment in customer engagement to achieve more visibility in consumer energy technology investment,” suggested Sumic.
They should pursue standards for integrating with customer energy technologies by enabling data sharing with customers and, in the near future, with things.
CIOs will need to work with the business to identify and pursue partnership opportunities in key consumer energy technologies (such as smart inverters or electric vehicle charging) by identifying leading consumer energy technology ecosystems.
Finally, utility CIOs should identify opportunities to create innovative services with consumer energy technologies and seek business backing to scale from proofs of concept (PoC) to full-scale service offerings.
At the end of the day, the idea is for utility companies to follow the changing needs of customers and support them — all of which opens up new and exciting opportunities, and can help bring in additional revenues.