Every one of us can now take control of how we use electricity thanks to three critical trends:
1. More information
Smart meters allow consumers to see their energy usage in real time, and to understand how their consumption rises and falls and what it costs. Smartphone apps linked to home smart meters give consumers regular usage updates, allowing them to dial back use of their most power-hungry appliances at peak times. This transparency lifts the mystery that used to surround our power bills and is proven to encourage energy efficiency. Research shows that more than 60% of people said they would be encouraged to be more energy efficient if they could understand how much their daily energy use was costing them.
This knowledge creates educated and empowered customers who are no longer prepared to be passive players in the energy world.
2. More choice
Digital has made changing energy suppliers easy. More consumers are switching — and more often.
For example, in Germany around four million households switched supplier in 2015, up 6% on the previous year. In the UK, where smart meters are being installed in every home, consumers are actively switching suppliers, with about a third moving to smaller, independent companies. This has eroded the market share of the country’s dominant “Big Six” energy retailers, which went down from 96% in 2012 to 85% at the end of 2016.
Price is often a major factor in prompting customers to move, but it’s not the only driver. Many customers are now choosing suppliers that reflect their personal values, such as retailers selling 100% renewable energy or those offering access to community schemes.
And superior customer service delivered in other sectors is raising expectations of energy providers. A new focus on customer relationships is translating into new innovations, including in the Netherlands where one utility has partnered with a smart thermostat and energy display provider to give the consumers a clear picture of their energy use and cost. In another example, a utility has adopted a voice-activated assistant that allows customers to check their energy account balance, next payment date and submit a meter reading.
Along with raising standards, digital technology is also lowering barriers to entry in the electricity market. Nontraditional players are crashing incumbents’ party with new, innovative ways to sell power. Some retailers are offering customers the option to buy electricity “packages” that mirror how mobile phone services or streaming video subscriptions are sold.
3. Right to play
Smart meters and digital technologies, including blockchain, are making it possible for consumers to become players in the energy value chain. Peer-to-peer (P2P) trading allows neighbors — both those with and without rooftop solar — to buy and sell energy among themselves, turning communities into self-sufficient microgrids.
Brooklyn Microgrid is one company harnessing this exciting trend. The New York-based utility is developing microgrids in its home city, with the aim of using locally generated electricity to improve efficiency and to increase resilience to extreme events.
Utilities can remain relevant — if they act now
By putting the consumer at the center of the energy world, the smart meter has triggered a rapid countdown for utilities. The clock is ticking on traditional business models. Consumers that control their own energy don’t need utilities to act as a middleman.