The world has primed the energy market for a change. The landscape is getting more and more complex, accompanied by increased demands and expectations for speed and accuracy from a broad range of market participants. As a result, the energy economy of the future looks very different than it does today, in no small part because technology has reshaped the way we navigate life in any number of ways.
This raises a critical question: Is the industry prepared to fully react to this new landscape, and can we apply our energy knowledge and expertise to design delightful products and energy experiences? At ENGIE, we believe we can, and in doing so will ensure that customers have what they want, when they want it at a reliable price, without interruption.
But doing that will require a new conversation about value, a shift in focus from a recognition that selling kilowatt hours should no longer be our sole business objective. That is mostly because a kilowatt hour simply has zero intrinsic value for our customers. A kilowatt-hour is valuable because it can be turned into something else. We must engage our customers in a completely different way in order to find what it is that matters most to them, whether it is light, climate control, business operations, or device functionality. If we can do that, we can foster a new dialogue between all the stakeholders of the energy economy from customers, to businesses, to the grid and network operators, to regulators and the environment.
"The energy economy of the future looks very different than it does today, in no small part because technology has reshaped the way we navigate life in many number of ways"
Traditionally, the energy industry has struggled with the concept of customer centricity. We tried selling our customers demand response, reliability, and time of use…Concepts, language, and products that they had absolutely no interest in. However, this lack of customer centricity did not matter too much as the customers in the traditional linear energy business model did not need to engage with the infrastructure behind the scenes. All they needed was energy being accessible in a reliable, affordable, and safe manner. However, as we transition to a circular business model—a fast-paced distributed renewables eco-system – customers evolve to being prosumers, demanding custom products, sustainability, and autonomy; hence start engaging with the infrastructure around them. For the masses, this engagement is not as sexy or interesting as purchasing an electronic gadget or renting a new movie. Therefore, as industry participants, we need to make it easier for them by starting to engage them in different ways around the jobs to be done. Examples to these are selling lighting, climate control, or sustainability as a service instead of selling the next kilowatt-hour.
In order to be able to interact with our prosumers in this business model, we, as an industry, need to start thinking about how to untether ourselves from the meters that are on the sides of our buildings and start delivering outcomes, optimizing the existing infrastructure, by leveraging another commodity that also has zero intrinsic value for the prosumer—called a kilobyte. Recent technology developments have made data and analytics a lifeline for our business continuously disrupting traditional business models and enabling digitization of energy which essentially depends on the conversion of customer data and system data into a digital form that can be protected, securely accessed and shared, as well as acted upon in a standardized way.
This type of framework will cause changes in the business models of today’s utilities and market participants. We believe, utilities in deregulated markets will transform into distribution service orchestrators which manage the neural grid and balance local networks by active control of distributed technologies. They willdeliver pricing signals via data exchange platforms around local and transmission system conditions and requirements, status and availability of distribution-connected generation, and other market information. Utilities in regulated markets and retail energy providers in deregulated markets will transform into service providers. They will settle local markets, provide essential services; and manage the animated interfaces with the market while owning the customer relationship. Today’s industry-driven initiatives such as Green Button will expand to foster the development of data repositories to ensure the secure delivery of data while keeping privacy intact (as today’s ATM networks did the same thing in the financial industry).
While this type of transformation requires courage and collaboration from all market participants – including regulators – if successfully executed, it has the potential to better serve a wide range of stakeholders in several ways that are vital to the nation’s energy future. The grid operators can reduce stress on the grid and minimize the risk for potential blackouts or brownouts. The regulators can more easily contribute to a low-carbon future by integrating renewables into the grid, reducing the demand for fossil fuel-fired generation. Businesses can lower costs and create budget certainty, freeing up more capital to create jobs or foster investment, as well as supporting operational and overall system efficiency. And of all the beneficiaries of this revolution, customers could be the biggest winners: Reliable and affordable pricing, dependable supply, and engagement with the energy market that they never had before—towards goals that they care about.