Energy companies facing the challenge of digital transformation
Many of the changes in the energy sector are caused by actors that are not traditional energy companies. These new and agile market participants are full of ideas and innovations to accelerate the decarbonization agenda.
The growth of this kind of companies is due to a customer centric strategy, aimed at transforming the way in which services are being provided by more traditional companies. Accustomed to the level of service they experience in other industries, customers demand more from their energy companies. This trend is more intense with millennial generation, compared to other age groups, showing a greater preference for smarthphone interactions and being more influenced by online reviews, peer recommendations and price / product comparisons.
Additionally, more and more electricity consumers are becoming producers (“prosumers”) thus radically changing the traditional energy supply model. Customers find it more and more feasible to disconnect from traditional energy companies to generate, store and sell their own energy. These trends are expected to continue over the next decade, since self-generated energy will reach cost parity with the electricity supplied to the grid from 2021. This makes the possibility of network independence available to even more consumers.
Compete and generate new business models in a digital environment
These market conditions promote more traditional energy companies to assume the need of a process of change, to question the way in which they are providing services to their customers and to see in the transformation a great opportunity to deploy technological projects that may attack the core of their business. Additionally, technological advances can provide a great opportunity to diversify the business model, such as the electric vehicle, where, in general, possibilities for exploiting the use of this type of vehicles are being explored. They also have the opportunity to identify good servicing practices that are being deployed in other sectors such as banking, selfie identification, advanced digital on boarding, etc. Therefore, on the table of all these companies is the following question: What digital initiatives and how should I deploy to achieve digital transformation?
Digital initiatives to achieve digital transformation
To answer, it is essential to know how the different enabling technologies can contribute to the energy business.
- Advanced analytics. It is possible to improve the user experience thanks to the provision of digital platforms for an easy and understandable visualization of aggregate energy consumption data (monthly or bi-monthly), costs, comparative data (historical and peer), which provides consumers useful benchmarks to adapt their behaviour and additionally provision of efficient tailored advice to reduce energy use and cost.
- Artificial Intelligence. Artificial Intelligence (AI) algorithms allow efficient management of electrical networks designed for the provision of charging service. Thus, for example, behaviour patterns can be predicted on, for example, one night from Monday to Friday in 2025, when millions of electric vehicle drivers arrive at their homes and put their vehicles in charge. Smart algorithms can also be used to compress, analyse and monetize the huge swathes of data that move through the energy ecosystem.
- Blockchain. This technology that facilitates the disintermediation can be applied to processes such as the collection of the energy bill, the sale and purchase of energy certificates or the way in which prosumers interact with the electrical grid. Thanks to its implementation, it is possible to know the details of the energy data and its provenance in a reliable way, exchange energy optimally or promote measures to encourage the consumption and generation of renewable energies. Thus blockchain will play a key role in the processes of certification and traceability of energy, wholesale trading, information of events in distribution networks, the management of consumption peaks and the management of self-consumption.
- 5G. This communications network 10 times more powerful than the 4G network allows better management of services/connections in real time, which for example facilitates energy companies to perform real-time predictive maintenance of remote devices (wind generators, solar panels, thermal power plants, environmental probes, industrial machines, etc.)
These technologies play a key role in a world in which companies constantly look for technological solutions that help increase efficiency and reduce costs; while, on the other hand, consumers are more informed about where the energy comes from. That is why energy companies must maximize the value of their digital ecosystem by involving more their customers using mobile applications and social media platforms, as well as self-service portals and chatbots.
The evolution of mobility and transport systems will also force the business model to change, since it is currently not possible to identify all the electrical consumption that a person has regardless of where they connect to the electricity grid and centralize them in a single meter or invoice, but with the production of electric vehicles it will be of great interest for the consumer to have a centralized invoice regardless of the location of the charging points to which his vehicle has been connected.
Conclusion
Faced with this environment full of challenges and opportunities, energy companies need a dual strategy that focuses on the daily needs of the current business; while innovating for the future they take full advantage of the opportunities that enabling technology offer their business. If you want to deepen how to approach the process of digital transformation we have experts who will help you.