Digitization and the Energy Industry: The Energy Revolution is Digital
Renewable energies, regulatory requirements, intelligent networks – the German energy sector is facing many challenges. What do current developments mean for the industry? And what sort of opportunities are presented by digital technology?
With the unbundling of ownership, the German energy market has become more diverse and broadened into a range of power generators, grid operators and energy marketers. And all of these players face their own challenges. Power generators and grid operators must invest in renewable energies and conventional electricity generation as well as in infrastructure. The reason is not just that people expect the conventional electrical grid to become a “smart grid” in order to link up the central with the decentralized power generators and consumers. The distribution network is also becoming more complex. To balance out the fluctuations in the generation of alternative energies, excess power must be stored or used in some reasonable way, such as for generating other forms of energy. This is what the so-called “power-to-X” technologies are for: power-to-heat creates heat, power-to-gas creates fuel gas, power-to-mobility supplies “fuel” for electric cars – and that’s just three examples out of many. As a result, more and more forms of energy are being integrated into the grid.
On the other hand, energy marketers are starting to face new competition, often from outside the energy industry. As in many other sectors, digitization is opening the market up and allowing new products and services. Other companies are eagerly getting into the act, including Google, which in 2014 acquired the smart-home services company Nest, a firm that markets intelligent thermostats. In a study conducted by Ernst & Young and the German Association of Energy and Water Industries BDEW (Stadtwerkestudie 2016), the respondents listed the possible competitors as telecommunications companies, operators of metering sites, and providers of measurement and monitoring services. That comes as no surprise: if smart home technology is making the cell phone a control center for home utilities, then telecommunications companies already have a foot in the door to the boiler room. The same applies to the operators of metering sites and providers of measurement services, when the usage meter becomes a smart meter – an Internet-connected digital gauge that can forward consumption data online. Because of the roles they play, these companies can offer complete solutions for energy management, for instance. This shows that digitization is a central issue for the German energy sector. Despite that, only one out of every six power companies has developed a corresponding strategy (source: PwC study “Deutschlands Energieversorger werden digital”).
But power generators and marketers can make very good use of digitization for themselves. Marketers, for example, can automate standard processes in customer management, such as when a customer changes address or switches to a different product plan. This is an area where chatbots can take over work from the service team and contribute to efficient customer service, given the increasing complexity in the “energy network of things.”
If energy marketers set up or expand multi-channel platforms, they simultaneously do more than just meet current expectations for what a customer journey should ideally be like. They also get a comprehensive picture of the consumers and develop a better understanding of their customers. They can in turn use this for customer loyalty measures and sales of new products as well as cross-selling and upselling.
And finally, the smart grid offers power generators many opportunities for innovative products and services in their very own core business. Smart meters supply them with precise information about how much energy their customers are generating and consuming, and when. Sensors in leased, decentralized generating stations provide information about the rate of utilization and the technical condition of these systems. Based on a systematic analysis and use of this data, generators can take over the energy management for large residential units, for example.
Supplying power is, all by itself, a relatively interchangeable product for consumers, as can be seen from the large number of “power discounters.” Companies must therefore win their customers over with good ideas and services making use of all the digital possibilities.
Author: Editorial team Future. Customer.
Image: Franz Metelec – Fotolia/Adobe Stock