Consumers are becoming increasingly aware of the value digital technologies bring to their lives. Whether it’s installing an intelligent thermostat in their homes that tracks their whereabouts and adjusts the temperature accordingly, or a smart speaker that orders them a cab, consumers are becoming extremely technology savvy and are keen to adopt new technologies.
Consumer-intensive industries such as communications, banking and retail are reinforcing the numerous advantages of technology adoption. These industries are setting the pace for digital transformation. Due to a high level of competition, they’ve placed customers at the center of their organizations’ strategies. In doing so, they are shaping and raising consumers’ expectations, driving them to build benchmarks on what technology and innovation can do for them and the kind of services and experience they can expect from ubiquitous mobility, data and connectivity.
Digital age is the age of the consumer
According to several studies conducted by Forrester, consumers are “hyper-adopting” technology innovations at a much faster pace than ever before. This in turn increases the knowledge consumers have about technology and favors the emergence of digital-born, customer-first start-ups that bring with them disruptive business models. Technology, information and connectivity are coming together to drive expectations that consumers can have what they want, when, where and how they want it.
As technology advancements outside of the utilities industry drive change and increase consumer expectations, utility consumers are beginning to expect the same level of customer experience and want technology to instantaneously deliver greater convenience and value. According to the 2016 CGI Global 1000 outlook, 47% of the executives interviewed from consumer-intensive industries say digital is now the only channel of choice for customers. Consumers expect no less from their utilities provider, combined with their desire to take control on how they consume and produce energy.
The move to a low carbon economy and climate change control policies are also driving energy technology consumerization, leading to the need for new services and business models to unlock the value of energy efficiency, demand response and energy flexibility. Decarbonization is shaping the edge of the grid with the connection of increasing volumes of distributed energy and driving the decentralization of the energy ecosystem towards the concept of an “energy internet” and an energy sharing economy.
As the world becomes digital, power is shifting from enterprises to end-consumers. Value creation in utilities is moving toward the downstream segments of the value chain such as distribution energy management, aggregation and flexibility services and value-added services to consumers. Utilities are disinvesting in traditional bulk generation, such as E.ON and RWE, in response to Germany pushing the country toward renewable power. Capacity markets are now on the table as a solution to a changing generation mix and the need for flexibility.
There is a growing understanding within the industry that consumers will be central to ensuring that new energy provisioning systems are sustainable, affordable and reliable. Leaders across all industries are putting their customers at the center of processes, policies and practices to successfully develop and deliver the experiences that customers want. This requires not only changing operating models, but also calls for executives to consciously lead the organization toward customer-centricity and outside-in thinking.
The emergence of new business models in a digitally-interconnected energy ecosystem
Digitization, climate change and new business models are creating a highly interconnected ecosystem that is transforming the energy value chain. New market players, such as demand aggregators and demand response operators are coming into play, especially in the UK market, which will rely on increasing amounts of intermittent renewable energy. The market is also taking on a dynamic of its own as consumers understand the power of flexibility. At the beginning of this year, three UK corporate giants announced the launch of an innovative real-time energy management scheme called the Living Grid. The aim of the program is to use demand response to make available 200MW of flexible power across the UK.
The energy sharing economy is also becoming a reality through peer-to-peer trading via blockchain and solutions such as the one CGI has developed for Alliander in the Netherlands. The solution, called REX or Realtime Energy eXchange, connects clusters of customers to existing energy trading markets so they can buy and sell energy based on their requirements. The access to trading markets allows demand and supply optimization, and enables both commercial and residential consumers to control the way they benefit from their consumption and production flexibility.
Traditional utility companies are exploring new ways of creating and delivering value and engaging with consumers. For instance, suppliers in the Netherlands are matching local renewable energy producers with buyers of green energy and some are looking into the potential of dynamic tariffs. Price signals to consumers will be key to change the energy system and drive consumers to take a more active role in its management. CGI has developed a central energy management solution that supports dynamic tariffs and demand response management, empowering consumers as market players. It provides consumers with tools to make smarter decisions about their energy consumption, while orchestrating much-needed collaboration between suppliers, data hubs and grid operators.
At CGI, we are responding to these market changes by helping utilities take an enterprise-wide approach to digital transformation and technology innovation. Through our solutions, such as the active asset management framework, integrated data network model and active low voltage grid control, we enable utilities to adopt more real-time, integrated and insight-led operating models. We help our utilities clients develop a holistic strategy and roadmap to transform into digital enterprises, while ensuring their shorter term needs of optimizing the business and reducing costs to finance change remains a top priority.