It’s hard to imagine, even a few years ago, that humans would be turning to a little internet-speaker-thing to ask questions like “What’s the weather?” and “How many pounds are in a kilogram?” yet here we are. It has even become an international pastime: How can I control everything in my home without moving from the couch?
We’re witnessing a new industrial revolution that will bridge our physical and digital worlds. Sustainability, responsible consumption, and accessibility are the hallmarks of today’s consumerism. We use sensors to track everything, and we implement software solutions to improve performance—connecting the physical with the digital to make what we have do more with less. This isn’t limited to our homes either; companies across all sectors are looking to reinvent themselves and stay relevant. Today, the oil and gas industry wants renewables in its portfolio after all, and 3D printing has revolutionized manufacturing.
With all this in mind, we see energy companies redefining their businesses in terms of a technology-empowered customer. What is the modern energy company’s role in our everyday lives?
Consumers and Energy Companies
Until recently, the relationship between consumer and energy company revolved around paying the monthly energy bill. Some consumers may have felt emboldened to install their own sustainable hardware, like rooftop solar panels, but they were few and far between. In Israel, for example, solar panels on homes are common, and yet most consumers don’t use this sustainable energy for anything beyond heating their water.
Most of the energy providers in Europe provide both electricity and HVAC to their customers. The infrastructure is already in place, therefore, for them to integrate more easily into their customers’ daily lives. They can build relationships and through technology, like sensors, bring understanding and transparency to customers’ energy habits. When the relationship extends beyond simply transactional, new business pathways open up.
All ‘Things’ Connected
As sources of energy expand to offer unprecedented choice and competitive pricing, customers expect control over managing their power consumption and costs. As a result, the traditional energy company needs to reinvent and find new sources of business. One option might be to partner with companies that offer home power management and customization services. Another might be to focus on smart appliances and an infrastructure centered around modern energy saving (think GE and its ties to hardware and manufacturing). Traditional energy companies might also take cues from technology leaders like Alphabet (Google), Microsoft, and Amazon, offering customers a DIY way to customize their energy spending habits in the home, generating revenue through a combination of hardware, software, and cloud solutions.
The connected home, therefore, seems poised to take on the energy sector’s next opportunity. Consumers expect new appliances to be internet-ready, energy efficient, and agile enough to fit into their existing smart-home network. Energy companies should move fast to ensure their existing customers don’t look elsewhere for these products and services, shifting the conversation from service price to service value.
One clear pathway seems to take advantage of smart sensors, offering customers insights and data that help them maintain appliances, eliminate power waste, and gain a better understanding of their consuming habits. In short, energy companies should strive to give their customers value that revolves around making their lives easier. To see this in action today, look no further than companies like Enel, E.ON and Shell. All communicate their services as energy / time-saving / smart / easy solutions for their customers, and they offer packages that bring a value-positive proposition for everyday life.
At the other end of the industry, companies like Alphabet and Amazon are busy building their own consumer-ready utility infrastructure through subdivisions such as Nest and Echo. They offer home security, safety detectors, energy solutions, and entertainment controllers. In a few short years, technology firms have created a home ecosystem that makes it possible for any home to be a smart home. For their business, they’ve created revenue streams that rely on hardware, software, and cloud storage. These are revenue streams that energy companies are bound to explore while this market is still far from being saturated with worthy smart home product lines.
For energy companies, it’s essential to recognize that their consumer-centered business is in flux. Their current infrastructure allows them to maintain a foothold in this shifting landscape, but it probably won’t be long before the tech giants will become the natural go-to brands to put the ‘smart’ in ‘smart home’.