Towards an energy-wise society
Tuuli Kaskinen, Executive Director, Demos Helsinki:
Digitalisation and climate change are two of the most significant global megatrends affecting the future of the energy industry. In the last few decades, the amount of data and the capacity of information technology to process data have grown exponentially. This transformation has not yet had as intense an impact on energy as it has had on telecommunications, for instance. However, the energy industry is not safe from change. What will happen, when energy encounters a similar transformation? For example, according to the New Energy Consumer report by Accenture (2015), 57 per cent of consumers are interested in investing money to become self-sufficient producers of energy. Could this have been true in the last few decades?
Climate change and preparing for it can already be witnessed in the industry. For instance, new organisational roles are being created in response to emerging challenges. In the years to come, the use of fossil fuels will decrease rapidly, and a growing share of the consumers of electricity will also become producers and storage holders as well as regulators of consumption. Simultaneously, as a result of the individualisation of consumption, energy is becoming more than just energy: There will be those who want their own solar panel, those who use their Tesla’s battery as a storage, and those who want the entire system as a service that they do not have to worry about. Pressure towards DSOs, legislators and others is growing.
It is difficult to predict how customers will react to changes, and reshaping their behaviour patterns can be tricky. For example, customers’ trust towards self-driving vehicles must be built from scratch. On the other hand, the supply of services that could already be applied on a wider scale remains modest. For instance, there are not a lot of smart home functionalities on the market.
One should also keep in mind that consumer needs are changing: In the future, fewer customers will be car-driving baby boomers and more customers will be flexitarian millennials. Nonetheless, at the end of the day most people would rather spend their time not thinking about energy. What they are after is a comfortable and fulfilling life.
So how should the energy industry prepare for the future? Here are four pieces of advice for leaders in energy:
- Make use of consumer data.
Data is where the value lies. Smart devices produce vast amounts of data on the production, transmission and consumption of electricity. You should put these data to work to create added value.
- Make sure you are offering services to prosumers.
Although decentralised production is still small in scale, it is growing rapidly. Business that now seems marginal is becoming increasingly important.
- Imitate other industries.
Digital giants are doing lots of smart things ahead of others. There is no need to reinvent the wheel if you know how to apply other organisations’ discoveries. Notice that companies like Amazon and Google are interested in all industries under disruption – including energy. They may soon be your competitors.
- Offer clean services.
Most of your customers are not interested in energy as a phenomenon, and most of them would rather not delve into the services that they are buying. What the customers want is effortless, flexible buying and services that they can understand without giving them too much thought and that are sustainable by nature. A DSO, for example, is only prominent in the everyday life of a customer when something is wrong and there is no power. Therefore, a company in the energy industry should not waste resources on polishing its brand – nobody cares. Instead, it should invest in designing services that are easy to understand and pleasant to use.