4 steps to utility transformation
- April 21, 2015
- 466 views
By Abhay Gupta
Simply put, the utility of the future will look a lot more like an Internet service provider or mobile carrier than your regulated utility. At Bidgely, we see multiple technologies disrupting the old utility business model. These technologies, including residential solar, smart thermostats and home energy management systems, are enjoying rapid consumer adoption. Even energy storage is quickly moving toward a tipping point in Germany, California and Hawaii.
Many utilities are partnering with providers of these new technologies in an effort to evolve their business models, better serve 21st Century customers and frankly, stay relevant. Now into the second quarter of 2015, I’d like to propose a four-step plan that utilities can follow to survive the 21st Century intact and become what the industry has coined a “trusted energy adviser.”
What’s eating your lunch?
Today’s disruptive energy technologies collectively threaten to eat a typical utility’s lunch. The first step onto the path to becoming a trusted energy advisor is understanding and acknowledging this fact.
Solar power is a great thing. It’s clean, cheap and widely available. It empowers and gives consumers a sense of energy independence. It also takes consumers a step away from their utility. It’s practically an industry truism that every solar installation is one fewer utility customer. In short, after you install solar, most consumers spend less than nine minutes a year interacting with their utility. Solar companies are already positioning with tech giants to become “full service”energy providers.
Soon enough, residential energy storage will be cost-effective and mainstream. Elon Musk’s Tesla Gigafactory is not only visionary, it aims to provide the missing link of the 1-2 punch that is the promise of distributed solar and the potential deathblow of the utility. Generate and store electricity by day, and then use it at night until you go to sleep. No more grid.
Smart thermostats control the most visible and understandable load in a home and do so automatically with increasing intelligence. With consumer consent, utilities can leverage the presence of smart thermostats to ensure peak demand program results and smooth overall demand on the grid during peak periods. This completely disrupts the demand response market (in a good way) by creating a natural synergy between the utility and the device providers. Utilities that do not have active smart thermostat programs risk ceding their role in energy management to Google, Apple, Comcast and others.
These consumer technology and Internet giants arenot going to stop at the smart thermostat. They all have ambitions to tie it all together and automate the home from security and lighting to energy. In so doing, they threaten to outright own the consumer’s home technology mindshare and relegate utilities to the background when it comes to customer engagement.
The 4 steps
The landscape is changing dramatically, and the competition for customers is entering a whole new era. The majority of major appliances in the world are not connected. They don’t communicate. But they do use electricity. All the time. The utility has the tools, the footprint and the existing relationships to help customers make smart energy decisions. Only the fittest will evolve and prosper. Think of this four-step program as a sort of survival guide for today’s utility.
Step 1. Become your customer
The first step is to stop calling your customers ratepayers and start treating them as people. Dare I say, even friends? That means utilities put themselves in the their customers’ shoes.They ask the hard questions that every modern service provider asks and is the mantra that consumer tech companies like Google and T-Mobile live by.
Customers want to know where their money goes each month. They also want to better manage their energy usage. Utilities have everything they need to answer these questions for consumers. They are in the best position to know their customers’ energy patterns and habits and do something meaningful for them.
In fact, they are the ONLY ones in a position to do so. Yet one thing many lack is simply the will.
2. Empower your customer
Empowerment is about giving your customer the tools to make better energy decisions. If you know your customer, why not take the bull by the horns and recommend solar if you think they are a good fit? Facilitating a customer’s purchase of solar makes you a partner and ensures your place as a full service provider. After all, why not empower them with the knowledge that going solar means a five to seven year return on investment and free electricity after that? Why not give them an energy rate calculator that helps them make the right decision for themselves?
Empowerment is not about inundating the customer with emails and alerts. Instead, it’s about advising them at the right time with the right communications. It also means meaningful, everyday engagement. Letting customers know that they’re using more energy than they need to and what a particular appliance is costing them is a true service. They’ll decide what to do next, and along the way your customer satisfaction scores will soar.
Step 3. Enable your customer
So your customer is empowered. What next? Help them act on small energy tech purchases like a smart thermostat. This is a fundamental part of knowing your customers. You know which ones would benefit most because you know who uses cooling or heating at peak times. Leverage that knowledge, empower your customer to act, and then enable them with discounts. Roll out demand response programs now that you’ve established a relationship, and they’ll trust you’re on their side to help them save energy.
Step 4. Become the trusted energy adviser
This is how you complete your transformation, stay relevant and stave off competition. Steps one through three have built the foundation for becoming a part of your customers’ lives. Becoming their trusted energy adviser means that you have to continue to treat these steps as a continuous cycle that builds trust with your customer.
It is essential for utilities to find their place in the smart home and serve energy conscious customers. The time has finally come for the home of the future, and utilities can play a key role.
Utilities that take these four steps can become a true energy service provider, trusted by their customers to give insightful energy advice and serve their interests. No doubt, it’s a long journey that is starting now and gaining momentum.
Abhay Gupta founded Bidgely in 2011 with the mission of developing scalable energy efficiency solutions.