Author: evdillon

The customer of the future is engaged

Utilities, retail energy providers, distributed energy providers, technology companies: on the surface, they are very different, with unique business models, resources, and areas of expertise. But ultimately their business is to enable customers to conveniently and economically carry out their daily tasks—whether it is washing their family’s clothes or moving goods through a warehouse—without interruption and inconvenience. But things are changing. Like it or not, these customers have a quickly expanding universe of energy market and technology options that allow them to go beyond the typical energy supplier. Attracting and retaining customers with so many alternatives will depend on how good you are at the next level of customer engagement.

The energy provider of the future

Imagine a world where the immense sets of data about markets, technology, use, and the customers themselves can be packaged into smart energy product and service options. Armed with these options, the energy provider can offer products and services that range from efficient appliances and equipment, to energy management systems, and even financing for solar PV or storage, as well as provide the customer with a holistic, strategic understanding of their energy use. This is the energy provider of the future. All of these elements exist today, but not in one place, or even by one type of company. What makes this company different from today’s energy provider? Customer engagement. The opportunity—and possibly the way to thrive in an increasingly competitive energy market—is to become the energy provider of the future.

In the current landscape, communication with customers tends to be very one way and focused on the immediate needs of the service provider: retailers focus on prices, enrollment, and retention; utilities focus on outage management and regulatory compliance; and distributed energy providers focus on sales. They are all communicating to their customers, but not engaging with them.

Customer engagement is two-way communication, where the energy provider understands what the customer wants and needs, and vice versa. The truth is that customers are becoming more and more aware of the choices they have when it comes to energy, but they are navigating these waters mostly by themselves. Going beyond bill inserts, call centers, and blast emails and engaging them with products and services that help them navigate the ocean of choices, energy providers can build trust and cement long term customer partnerships. In turn, customer engagement is essential for energy providers to key in on effective and efficient solutions and form strategies about the services they offer.

While this level of engagement used to require expensive outreach, the increasing deployment of smart meters, energy management widgets, and smart homes allows energy providers to efficiently harness multiple streams of data to build granular customer-level insights. This, in turn, enables creative and customized solutions whether the customer is a residential, a small business, or a giant conglomerate with multiple campuses and operations. Now that’s engagement.

Becoming the energy provider of the future requires innovation, persistence, and a new way of viewing one’s customers. The question that remains is: Who is going to step up?
Join me at the Energy Executive Forum, where we will bring together experts with the insights and knowledge to help you become the energy provider of the future. Register now and take the next step in creating the energy future.

John Landry
Vice President, Competitive Markets
DNV GL Energy

John Landry is organizing and leading the panel “Energy Choices: The Customer-Focus Imperative” at the 2018 DNV GL Energy Executive Forum on May 16th. Register today to meet John at the Forum to continue the discussion.

Harnessing the power of smart buildings for energy management

Smart buildings. Smart homes. These terms come up a lot in a variety of circles and in many different contexts: energy providers use it when they refer to energy use or savings, technology companies talk about it in reference to the Internet of Things, architects talk about it when discussing achieving zero net energy. But what does it mean when it comes to an actual building, rather than a theoretical one? At the leading edge, a smart building’s systems—lighting, thermostats, energy management, occupancy sensors, security systems—are interconnected to sensors, can be controlled via an app by the facility manager or homeowner, and are programmed to respond to a set of conditions. Essentially, the building takes over and runs itself, optimizing energy use and not reliant on flighty humans to remember to turn off the lights when they leave a room. Smart buildings also provide plenty of data about energy use that can inform building owners and help them make changes to further lower their building’s energy costs.

While a bulk of energy savings (whether from a smart building or just energy efficiency) comes from lighting, smart buildings are the stepping stone to the ultimate in energy savings: zero net energy (ZNE). California has mandated that all new residential buildings be 100% ZNE by 2020, an ambitious goal that is arriving very soon. The state usually sets the stage for these types of initiatives – many states now follow California’s vehicle emissions standards, as well as other mandates that were first initiated in California. While there are many approaches to achieving ZNE, there is one component that underlies all of the renewable generation and high efficiency appliances: behavioral changes. And a smart home, with all of its sensors and interconnections, provides the information that a homeowner needs to understand which changes they need to truly achieve ZNE. Much like Prius owners, who have been found to use up to 20 percent less energy as they drive because of the information their car provides them on the dashboard, people will be able to respond to signals about their energy use from the data their smart home provides.

No longer a futuristic daydream, owning a “smart home” is now a reality, from energy-efficient solar panels to security systems. Even if the building isn’t designed to be ZNE, using less energy is becoming a priority to many consumers. Moving forward, buildings will need to have more than the current trendy finishes to sell—they will also need to be smart enough to save their owners energy—and money.

Betty Seto

Head of Department,
Sustainable Buildings and Communities

Smart thermostats: the gateway drug to true energy choice

Today, the choices consumers make about energy use are mostly based on how much and when energy is used, within a relatively limited framework. Energy choice tomorrow will mean something much different – technologies will enable consumers to decide how much energy they use, when they use it, what price they want to pay, and even where the electrons come from. This change is coming, and the bellwether is the smart thermostat. It’s the first step in the evolution from consumer to prosumer.

In the beginning, people had simple thermostats that were easy to operate: set the temperature with a dial or a tiny lever and adjust as needed. While they were easy to use, if you wanted to save energy while you were out or sleeping, you had to remember to adjust it manually. Next came programmable thermostats, where the occupant could set a schedule for the temperature range during a certain time of day, depending on occupancy or preference. You had more control, didn’t have to come home to a cold or hot house, but, unlike its predecessor, it was a bit more difficult to use. You need to actually program the thermostat, and studies have shown that the expected energy and cost savings are not always achieved, either because people continue to use their programmable thermostat like a manual one, or they didn’t set up the schedule correctly, overestimating operational time and comfort levels.

The latest advance in controlling interior temperature and occupant comfort, smart thermostats, are easily programmable and controlled through an app or via their friendly interfaces. They have cute names like “Nest” or “Ecobee” (which comes with a “Lil’bee” so it can more accurately monitor temperature and occupancy) and can sense when you are home or away and automatically adjust accordingly. An estimated 8 million households currently have smart thermostats, and this is expected to rise to 40 million households by 2020. While this isn’t a huge segment of the population (there are 126 million households in the US), it will change the way a lot of people approach their energy use – and the choices they make about it.

The next evolution in technology – which, in some cases, is already here– will give consumers a much more granular view of their energy use, and provide even more choices. Right now, consumers can see how much energy individual appliances use or automatically operate something based on the price of electricity, rather than a set schedule. Blockchain may make it possible to trace electrons from their renewable source to the electric bill, allowing consumers to decisively know that their energy use is sustainable and green. These are things that already exist in some form or another. Just imagine what’s next.

 

Best,

Michele Tihami

Country Manager – North America
DNV GL Energy

Join us in May at the Energy Executive Forum where Michele Tihami leads the main stage panel “Energy Choice: the customer-focus imperative.” Registration is now open. 

Bitcoin energy hogs in the post-middleman era

There’s been a lot of news involving Bitcoin recently, the cryptocurrency that’s skyrocketing in value. But what really got me thinking about Bitcoin was hearing that the world’s first waste-to-energy crypto-mine had opened. Entrepreneurs built their very own plant to power the mega-computers needed to create money out of thin air (or in this case, burning tires). The value of each bitcoin is now so high, and the market for them so volatile, these new age miners have the drive to be selective and creative with their energy procurement. And what they are choosing is unconventional, cheap, on site and independent from the grid.

What I find most interesting is that this kind of innovation is happening way faster than anyone anticipated.

Entrepreneurs appear to have no patience to wait for what they perceive as “middlemen”—namely, electric utilities. There also may be a mindset where innovative thinkers have a bias towards innovative energy. If they’re smart enough to build a Bitcoin mining operation, they’re smart enough to figure out that old tires are a cheap power source—and they don’t have to wait around to get it.

If coal fueled the industrial revolution, what will fuel the cryptocurrency revolution? How can utilities and other power providers cater to the needs of fast-moving, power-hungry technologists (yes, that double meaning is intended)?

I’d really like your thoughts on this and hope you’ll have time to join the conversation here—or attend the Energy Executive Forum in May where we’ll talk about customer energy choice. This landscape keeps changing at blurring speed but when we put our heads together we can find a path through it, and perhaps make some bitcoin along the way.

Best,

Michele Tihami

Country Manager – North America
DNV GL Energy

The truck-sized EV regulatory challenge

Elon Musk is at it again—this time with his sleek bullet-shaped, multi-electric engined, nuclear bomb-proof glass equipped rocket of a semi truck. You look at the launch video and it’s easy to think (yet again) “this is so cool.” Walmart, DHL and other major truck purchasers agree, with numerous pre-orders already on the books.

Where there is disagreement is on the question of who should own the new system of charging stations that will be required when EVs are used on a wide scale? DNV GL’s Energy Transition Outlook report shows 2022 as the tipping point where EVs will reach cost-performance parity with conventional light vehicles. That’s not far off.

Many utilities are eager to counter flattening demand with revenue from fueling EVs at their own charging stations. But regulators are saying, “Not so fast.” Many regulatory bodies believe allowing utilities to own the new charging infrastructure would represent an unfair competitive advantage and rate of return.

Some might argue this is short-sighted. Others enjoy market competition.

Utilities ask, what better way is there of increasing load and adding onto the grid than having a larger infrastructure? The more customers go off grid, the fewer customers there are sharing the total infrastructure cost. In the end, utilities spread infrastructure cost across a larger asset base and provide cost-effective power for consumers.

What’s your view on this? Share your perspective: the voice of our energy executive community needs to be heard in order to shape the debate and find solutions that work for customers.

Best,

Michele Tihami

Country Manager – North America
DNV GL Energy

What can Internet Providers Learn From Utilities?

On November 6th, huge swaths of the Internet went dark for about 90 minutes. The cause turned out to be human error traced to something referred to as a “route leak”. Internet Service Providers (ISPs) use Autonomous Systems (ASes) to track data that travels through different networks. On the 6th, the route leak occurred when the ASes relayed bad information about their IP addresses.

Net-net: about half of the United States’ vital information infrastructure went down thanks to several ASes and their route leaks (Google it if the Internet’s working—I’m not making this up).

Utilities have taken a rap at times for being slow-moving traditional energy players, though many of them are eager to transition to a digital “Internet of energy.” But the instant, interconnected nature of the Internet creates challenges when downtime is on a massive scale. If half the country lost its power for 90 minutes there would be chaos, followed by Congressional Inquiries. It seems to me that utilities could teach ISPs a thing or two about reliability.

The digitization of energy has much to offer. Greater efficiency. Data access. Lower costs. The list of benefits is long, and the rallying cry of change will surely not abate. But you need to have a clear-eyed view of the risks that digitization brings. While utilities are skilled at balancing risk/reward, how can others—in areas like distributed energy and IoT—move forward while being cognizant of what’s at stake?

Successful transformation will come to those who consider three things: possibilities, priorities, and pace. First, understand the entire landscape—how are your customers changing, and what possible unique solutions can you provide in a digital energy economy? Second, what are the priorities of your stakeholders, shareholders and customers? Lastly, set an appropriate pace for moving forward. Change doesn’t have to happen overnight.

Did you notice last week’s Internet outages? What’s the number one thing DER and IoT players could learn from utilities? Let me know in the comments below. I’m excited to hear what you think.

 

Best,

Michele Tihami

Country Manager – North America
DNV GL Energy

Welcome to the era of energy abstraction

There’s a lot of talk in the energy sector about a new era of customer choice. Finally, companies can offer not just different kinds of energy, but new tools that make managing it easy. These new offerings are exciting, but they all rest on a common assumption: that customers want to think about their energy consumption habits at all.

Engaging customers who are actively interested is challenging enough; capturing market share from customers who just don’t care may be impossible. To win, companies will need to think in terms of abstraction rather than control; customers will engage with offerings that allow them to manage spend without having to manage price or vendor—to save money without needing to understand how those savings took place. Amazon’s Alexa, for example, may offer suggestions for saving money that just happen to involve your electric bill. Indeed, as technology giants seek to “own the home,” I can see a time where the companies driving consumer energy choice are not sellers of electricity—they simply want the usage and provider data.

Using the principle of abstraction for business advantage means thinking about customer empowerment in a different way. How can you build customer relationships when there will be more intermediaries between the customer and supplier? What are the offerings that keep you connected to your customer rather than make you an anonymous commodity provider?

After Equifax’s mismanagement of customer data, we saw an example of disruption through abstraction. An inventor launched a bot that sues Equifax for you; one webpage is all it takes. The company that launched the bot is not in the business of legal advocacy, yet their model will have an impact on law firms as well as the number of claimants against Equifax.

What’s the energy equivalent? Let’s discuss the concept of “energy abstraction” below. I have several more opinions to share on this topic and I expect that you and your peers do as well.

Best,

Ed Cuoco
Vice President, Market and Policy Development
DNV GL Energy

Edward Cuoco, Vice President of DNV GL Energy’s Market and Policy Development services in North America, oversees delivery of energy advisory services to ISOs/RTOs, utilities and independent power producers (IPPs), wholesale and retail energy professionals and other stakeholders. His expertise combines data science, change and risk management, as well as energy wholesale and retail markets experience. Ed’s dedicated team of energy professionals provide strategic advisory services to energy stakeholders across the Americas who face a changing landscape marked by increasingly complex business challenges. Contact Ed Cuoco.

Partner or die? Strategies for the Convergence.

Should I look to form a strategic alliance? And if so, with whom? This question is on the minds of many energy executives looking for ways to survive—and thrive—in the energy Convergence. As just one recent example, Google and Walmart have announced a partnership that brings together Walmart’s huge retail operations with Google’s online mastery; now anything consumers would buy at Walmart stores can be purchased through Google Home via Google’s web platform, mobile app, or voice assistant. The benefit of this partnership must have been unmistakably compelling for both entities when you consider the following:

  • Never in Walmart’s history have they sold products through websites other than their own.
  • Walmart’s 2-day shipping competes directly with Google Express, offering free shipping over a set price threshold.
  • Just one year ago Walmart paid $3.3 billion for Jet.com so they could compete with sophisticated digital players like Amazon and Google directly.

As the Convergence accelerates, more and more companies will form strategic alliances like this with companies outside their industry—unexpected pairings that make a great deal of sense when viewed from a radically different frame of reference. The newly announced partnership between Comcast and Sunrun is another recent example. Sunrun will be the exclusive rooftop solar provider for Comcast’s vast base of customers, while Comcast builds a whole new revenue stream.

But these alliances aren’t just about boosting sales. Sunrun gains a way to improve customer relationships through Comcast’s existing customer service model. Comcast gets to portray itself as the go-to resource for all things related to the home. Walmart instantly becomes more digital on a grand scale. Google makes a Google-sized statement about its ability to compete and win against the world’s largest online retailer.

To succeed in an unlikely partnership, today’s energy players have to critically examine their own strengths and weaknesses in the context of new relationships. Successful partners will identify the business practices and assets that are truly unique to them, accept shared ownership of new territory, and determine their tolerance for risk in this very dynamic energy landscape.

What are your thoughts? Please share below, or contact us directly for a conversation.

Best,
Carole Barbeau
President of Energy Advisory – Americas
DNV GL