chapter 3
 

A desire for something new

The way we live and what we expect from service providers has changed. So why haven't the services provided by suppliers changed?

 

Please stop asking me to use less energy

The world’s population is forecast to rise to 9.7 billion people in 2050. This combined with increasing numbers of electric cars, bikes and scooters means that the demand for energy will continue to grow.  By 2050, we may need 40% more electricity than we do today.

Campaigns or services centred around us using less energy are likely to fall on deaf ears. Although the type of energy we use and its source is likely to change.

According to the National Grid, the highest proportion of UK energy is supplied by gas. With growing demand, global green ambition and technological advances this balance is shifting towards electricity.

Our energy consumption may also be affected by climate change. Increasing temperatures and changes to weather patterns may raise the peak electricity demand in summer to a similar level to that in winter.

 

Just stop with the price is a barrier to switching to renewables

Yes we are price sensitive when it comes to our energy supplier.  This is not new news. Luckily, in 2018 onshore wind and solar energy will become the cheapest way of generating electricity in the UK. Solar panel prices have already dropped 70% in the last few years as the technology matured.

The increasing efficiency of renewables is driving many independent power producers to enter the market. At last count there were more than 60 providers in the UK energy market.  To encourage customers to switch, these new suppliers don't just offer renewable options and a different service - they also offer a lower price. It won’t be long before just offering renewable options isn’t a differentiator - let alone charging a premium for the renewable option. 

This renewable future may be closer than we think.

 

Lower price and a better service is possible   

Price isn’t the only service differentiator and it isn’t going to be enough to keep customers in the future. In fact, price only driven auto-switching is already creating customer credit problems.

We will increasingly rely on algorithms to make our decisions to reduce the noise in our lives.  Given that most energy providers use messaging that’s generic, superfluous or difficult to understand its likely we will choose to automate some or all of our interactions - on average, customers receive about 40 distinct pieces of content a year—but more than 70% say they still need more information.

Consumers already have access to services such as Flipper that automatically switch you to the best energy deal.

Regulatory changes such as Open Banking are just the beginning—enabling the convergence of data from many disparate accounts, heralding new possibilities for transparency, personalisation and automation of services for consumers.

When machines can talk to us and each other, our home assistants, connected cars, appliances, smart meters and other products and services that help us track and monitor energy usage, will make sure we will never be paying more than we need to for our energy.

How will providers compete when decisions and negotiations on price, usage and source can be made on our behalf?

Say hey@adaptivelab.com  if you'd like to chat about how providers can compete in this new environment. 

 

More decentralisation of the energy market  is on the horizon

Energy decentralisation broadly refers to energy that is generated off the main grid. This can be to serve single buildings, local communities or entire cities.

Thanks to technology, a new local low carbon energy economy may be on the horizon. It is possible that the future includes a large number of P2P networks with the ability to produce their own electrical power and feed it into their own version of the ’grid’. Or that consumers become “prosumers” and the electrical grid becomes bi-directional, like a social media network.

Seattle-based startup Drift, is already attempting to change electricity delivery in deregulated markets; using a cryptographically secure system (kind of like blockchain) to connect consumers directly to energy producers, granularly matching customers’ environmental or cost preferences.

Piclo automatically sources energy for environmentally-conscious businesses from local generators. The ability to see where energy was sourced from has led to very high engagement rates … and some astonishing results. The community-owned turbines in Gorran, Cornwall, supplied almost 100% of electricity within a 33-mile radius.

In Germany, over 50% of renewable energy being installed is community-owned. Thanks to massive investment in renewable energy in Germany, consumers were actually paid to use power over the Christmas period when supply outstripped demand on a number of occasions.  

Across the UK, community projects and organisations focused on alleviating fuel poverty in inner cities are investing in decentralised networks. This brings down prices, improves energy security, cuts carbon and makes communities more prosperous and resilient.

 

In this context, what does the energy service of the future look like?

Chapter 4: Why energy providers should care right now ➞