Driving the energy transition with digitalisation

Digital transformation is key for a successful energy transition and energy customers are at the forefront of this monumental shift. So, what does successful digitalisation look like, and how can it empower excellent service for customers and a cleaner future for the planet?

Ahead of the upcoming event Future of Utilities: Energy Transition Summit, Gentrack’s Tim Hearon, spoke with us to answer the top five questions on the tip of the energy industry’s tongue as we progress towards Net Zero by 2030.

1. What notable requirements are emerging in the billing and customer experience world because of the energy transition?

The path towards a sustainable future in the utilities sector relies heavily on technology-driven transformation. The energy world sees this, but not all stakeholders are turning this challenge into the opportunity created by the abundance of data available to energy and water retailers. The crucial factor in realising the potential benefit is the effective access and utilisation of this data. Suppliers need to leverage data to gain valuable insights and provide highly personalised recommendations to customers, empowering them to make informed purchase decisions themselves on the right time, price, and suitable channels for their services. It is time for utilities to move beyond their existing legacy software providers to eliminate data silos, and transform their IT stack to embrace cloud, advanced analytics, low-code / no-code technologies, and composable plug-and-play architectures. Legacy systems were not designed for the free flow of data. Moving to a composable architecture provides utilities providers with the opportunity to build a plug-and-play tech stack and scale their technology as their business grows.

Achieving this requires dismantling data silos, harmonising diverse customer systems, and streamlining processes. By adhering to these principles, suppliers can not only optimise the value of their data but also pave the way for a more sustainable and prosperous future for the industry.

2. Do current IT systems impede energy suppliers in actively contributing to the broader energy transition?

The rate of change is increasing. The IT systems essential for the operations of contemporary retailers and gen-tailers must evolve to meet the upcoming challenges of decentralisation and decarbonisation. Analysts in the industry foresee a substantial change, estimating that 20% of utilities worldwide will undergo significant IT transformations by 2026, with the entire industry following suit in the next decade. Furthermore, legacy systems are discontinuing their utilities solution, placing many customers at a pivotal juncture where they must decide on their next partner. Prominent utility companies emphasise that their outdated systems are acting as a hindrance to innovation and progress. Failure to modernise their information technology (IT) infrastructure will result in a widening gap between them and industry advancements – and ultimately the energy transition. These IT investments, such as billing and customer experience platforms, play a crucial role in enabling technologies for the ongoing energy transition. Clean energy extends beyond traditional elements like turbines and solar panels; it involves establishing a grid capable of handling intermittency and distributed generation. This requires flexibility, adaptability, hedging strategies to provide dynamic pricing, and empowering consumers, who are increasingly transforming into energy generators themselves.

The existing commercial and operational models in today’s energy retail landscape are no longer suitable for the current needs. The process of creating, marketing, and delivering products and services focused on decarbonising homes and businesses differs significantly from traditional commodity-only models. To successfully navigate the energy transition, a comprehensive transformation of billing and customer engagement is necessary for energy providers. This transformation should involve a reassessment of business strategies, commercial models, and operational approaches.

3. Is transformation an urgent requirement for energy retailers?

When undertaking such a transformation, it is crucial to have clear expectations regarding the desired outcomes. In the energy industry, three fundamental goals stand out: increased revenue, reduced costs, and satisfied customers. The primary focus of any transformation should be on excelling in these three KPIs. By embracing transformation, energy providers can capitalise on new revenue opportunities, facilitated by the ability to swiftly create and deploy innovative products.

These IT investments contribute to the technological foundations facilitating the transition to sustainable energy. Clean energy extends beyond turbines and solar panels; it involves constructing a grid capable of managing intermittency and distributed generation. This necessitates flexibility, adaptability, hedging for dynamic pricing, and empowering consumers who are transitioning into energy generators themselves.

4. In what ways should the dynamic between energy suppliers and customer evolve to meet the demands of a changing energy landscape?

The era has past when customers would tolerate subpar service in exchange for lower prices. In certain regions, regulatory interventions have eliminated competition in commodity costs entirely. The impact of global gas prices has been challenging for consumers, prompting a shift in conversations. Technologies such as solar and battery are now seen not only as environmentally friendly options, but also as an effective means to significantly cut costs. Take Amber Electric as an example, not only are they enabling their customers to buy their energy directly from the wholesale market, but they’re also enabling them to sell the energy stored in their domestic battery or directly from their solar panels. And of course, our customer Energy Australia, who last year launched their Solar Home bundle, whereby they offer homeowners the installation of solar PV and battery systems with zero up-front cost, and then ownership of the system at the end of seven years. Looking ahead, the relationships between suppliers and customers must transcend mere commodity transactions and evolve into partnerships with a deeper understanding of individual needs and preferences, especially as consumers are evolving into prosumers. This shift will empower suppliers to engage in more valuable interactions, offering personalised propositions and experiences. Achieving this transformation will be a complex task, requiring efforts to rebuild trust, which is of particular importance as younger generations become a larger part of the customer base. These younger consumers will set higher expectations for their suppliers, comparing experiences not just within the energy sector but across all industries, such as banking and telecommunications.

5. How can energy suppliers effectively balance profitability and competitiveness while keeping pace with innovation?

Ultimately, achieving competitiveness hinges on providing consumers with what they need and desire, thereby adding value to their lives. The challenge lies in executing this effectively and continually innovating in line with evolving customer needs. The optimal approach involves highly automated, digital self-service customer experiences that seamlessly integrate across various channels and offer new innovative customer propositions. Ideally, customer interaction should be limited to instances where it is truly necessary and brings significant value. A crucial aspect in ensuring the success of this approach is establishing robust foundations for the management and maintenance of data. The quality of underlying data and well-maintained digital records are critical for success, as the effectiveness of the digital experience layer is contingent on the quality of the data and records that support it.