Four Utility Trends to Watch as Alternative Energy Solutions Gain Traction

January 28, 2015 By Swapnil Shah

Swapnil Shah

In his recent State of the Union address, President Obama underscored the mounting prevalence of a full portfolio of energy solutions including alternative energy, like solar. In view of the diversification of consumer energy options, the utility industry finds itself at a pivotal inflection point and we are beginning to see major shifts in how utilities approach their customers. Deregulation, new competition and the consumer-driven economy have challenged utilities to transition from just monthly bill senders to trusted energy advisors. What trends will we see push this market transformation?

  • Active responses to a continued rise in distributed generation: The trend toward distributed generation will continue to grow as customers become more aware of distributed energy options and the U.S. market becomes more deregulated. Rather than seeing the local utility as the sole source of energy, we will increasingly see businesses and homes choose whatever option – solar, microgrids, retail energy providers, etc. – offers them the best value. With more and more customers generating their own power, utilities will increasingly seek out ways to become part of this value chain and decision-making process – thereby delivering timely guidance and value.
  • Customer engagement becoming a true C-level conversation: As changes in the energy space begin to transform traditional power generation and delivery business models, one of the tenets of the new energy game is “whoever provides the best customer experience wins.” With such high stakes on the line, we expect C-level executives to get more actively involved in conversations focused on ways to boost customer engagement and deepen customer relationships. We have seen that using innovative data analytics approaches provides utilities valuable intelligence that helps them get closer to their customers.
  • The proven impact of Deep Data (in addition to Big Data) analytics: As data science techniques become more advanced, utilities have new opportunities to unlock insight into their customers’ behaviors and tendencies. Through Deep Data analysis – a framework focused on smaller, highly relevant pieces of data – utilities can capture the right combination of energy usage, demographic and firmographic information to personalize energy recommendations for every customer based on their environment and particular circumstances.  Utilities can start to count on this data insight to offer value to customers and, consequently, enrich the relationship.
  • A growing premium for actionable customer insights: The growth of data and information about customers is a start, but not particularly useful unless it can be used to drive informed action. Consider online shopping at Walmart, Target or Amazon; leading retailers use multiple streams of data to target shoppers with items they may find interesting (or that they didn’t know they wanted). In the same way, utilities can look at customer energy use data to identify the right programs, products, and services on a personalized level, helping the customer to save and the utility to speed up and lift  conversion rates – again, benefitting both parties.

As these trends take hold, we will continue to see the Utility 2.0 more clearly emerge. Already, some utilities and energy suppliers have taken steps to advance toward the “2.0” model. British utility E.ON recently partnered with FirstFuel to help launch “My Energy Toolkit.” Through the application of analytical software, E.ON has been able to provide its business customers with ongoing and specific insights into their energy consumption – providing clear value and proving its position as a helpful energy partner that provides trustworthy information.

In the short term, we can expect to see more and more utilities adapt their business models to become more customer-centric. Utilities will find that these business model shifts will be crucial for maintaining their role and influence in an industry in which customer choice, control, and expectations are on the rise. 2015 will prove to be a critical year for the utility industry and we look forward to the innovation that will undoubtedly result.

Swapnil Shah is CEO of FirstFuel.

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