We have identified five key trends that are likely to transform retail energy organisations over the next 12 to 36 months. We will delve into insights around self-service for vulnerable customers, localised energy mini-micro plants and regulator vs innovator. All emerging trends that can empower you in providing better services for your customers.
Trend 1 – Human experience vs digital experience
When we look back, 2020 will be remembered as a sombre reminder of how fragile our lives are and also how resilient we are as a society. To keep everyone as safe as possible, the adoption of digital technologies was sped up, whether this was through remote working, home schooling, online shopping, staying in touch with family and friends, or paying your bills online, the nation was forced to adapt to the ‘new normal’. It goes without saying that this new normal is digitally driven, and will continue to grow exponentially, as we look to open up travel overseas to fire up trade and economies globally.
During the global COVID-19 pandemic, customers increased their use of online customer self-serve channels to address their issues. As people began to adapt to lockdown living in response to the pandemic; service apps and digital tools usage increased. A report by the Northridge Group, found 63% of customers being motivated to use digital applications and 75% will continue to prefer digital apps post-pandemic.
So what does this mean for your vulnerable customers? Are your existing self-service tools, policy, products, systems and implementation tools fully capable of supporting them in a digital world?
As organisations map the customer experience journey, regulatory and compliance efforts will need to be reviewed to support their vulnerable customers. There will now be a greater need to substantially reduce limitations and eliminate complexity.
Organisations will need to take more innovative and proactive approaches to interact with these consumers and meet their expectations in the future. Policies will need to be in place to protect vulnerable customers and technology will have to be seamless to enable those who are vulnerable and allow greater independence.
Our CodeWorks policy management platform can help your organisation to create, implement, and maintain these new policies and procedures for the new digital world; while setting standards of best-practice across the energy industry.
Trend 2 – Grey areas in cloud systems
Cloud systems and services are an unsung hero in the COVID-19 pandemic; the tech that seamlessly enabled employees to quickly set up office at home and keeping many businesses fully operational in 2020. For many organisations globally a heavy reliance on cloud applications and cloud services has become the new normal.
As we start to ease out of the pandemic, more organisations are embracing a flexible approach to employees’ working locations, with many including PwC, HSBC and Centrica announcing they will work towards a hybrid work model post pandemic. This will increase the dependency of cloud systems and we will see more companies move some if not majority of their processes to the cloud.
More organisations are embracing a flexible approach to employees working locations. But how do you maintain regulatory policies outside of the traditional office? How do you prevent data theft when it’s stored online and accessible via the Internet? What compliance risks and policy gaps need to be addressed when teams are working in a hybrid model?
Organisations need to formulate new policies and procedures to ensure cyber / data security, privacy, accuracy, quality, and control are maintained and consistent across all remote working practices. The three key areas include:
- People: Are you staff ready for the change in working habits? Do they have the right equipment and training for longer terms work outside of the office? What tools and policies have you put in place to attest that your employees fully understand? How do Health and Safety Policies need to be adapted for flexible working?
- Technology: When systems are accessible through home WIFI, is the security equivalent of an office network the same? Making sure your systems are secure, accessible, flexible and non-discriminatory; future proofing your technology to integrate within your existing IT ecosystems ensures you have the potential to accommodate the needs of tomorrow as well as today.
- Process: Remote working brings a new challenge around technology saturation and how to avoid it. It is important to make sure communication between teams is efficient. Having an online centralised system like CodeWorks which can house your organisation’s policies gives employees a reference point for when they need reminding of small details and it also helps to reduce unnecessary emails.
Remote working brings a new challenge around technology saturation and how to avoid it.
Trend 3 – Death of the traditional energy tariff
Some companies are now shaking up the industry by adopting what is called “agile”, “flexible” or time of use tariffs. With the increasing penetration smart meters, it is now possible to tell how much energy a customer uses in each half-hour period. Using this information, the energy supplier is able to match your usage to the market prices in each half-hour. If the wholesale price drops, the electricity supplier will pass these lower prices on to their customers. This of course is a win-win scenario for the supplier and the customer.
However, we see a big trend in consumers turning their homes into micro power plants as they produce electricity using rooftop solar panels, store it using batteries (including EVs) and engage in localised energy markets for trading. The outcome of this decentralisation where some power will shift towards the end consumer will have game changing impact which will bring new challenges and opportunities for the industry as a whole. So, what this would mean for the future role of a traditional utility?
We see a big trend in consumers turning their homes into micro power plants
From a regulatory perspective, through use of digital technologies it is now possible to envisage a branched regulatory environment. These branches of regulatory codes can all enshrine similar principles (trunk) and provide specialist guidance and regulatory oversight for both the standard market use cases and increasingly nuanced ones. One branch of use cases could serve generators, distributors and suppliers in the traditional market where another branch could regulate the market for prosumers and local generation and microgrid operations. The roots for the principles and these branches need to deal with greater accountability and transparency on ecological and environmental impact, decarbonisation and protecting vulnerable users.
Given the ambitious decarbonisation targets, these regulatory challenges will require digital foundations that enable changes to cascade quickly. Using a digital regulatory hub platform to keep track of all the branches of code and use cases can help your organisation to simplify and strengthen regulatory compliance efficiently in your organisation.
Trend 4 – Challenger brands in the driving seat
The energy industry is re-inventing itself at high-speed, and it’s the challenger brands that are steering innovation for more bespoke products and services that consumers expect. We’re seeing a rise in green energy, energy managing software, and digital transformation in the industry. Energy companies are becoming more tech focussed and customers are no longer loyal to the ‘big five’. According to Ofgem, the Big 5 used to supply nearly 100% of households, this has gone down to around 70%.
Energy companies are becoming more tech focussed and customers are no longer loyal to the ‘big five’.
The energy supplier landscape shift can be compared to the car industry, for example when Tesla emerged; a newcomer, and arguably, complete rank outsider in terms of industry, completely disrupted the legacy transport industry. Just as Tesla has proven to be an existential threat, the same could be said for challenger brands who are introducing major innovations and setting standards for others in energy.
What challenges does this bring for an industry that is highly regulated? Does the existing regulatory framework act as a constraint on innovation? How can regulators encourage innovation?
Supervisory vs Innovation. With the energy market becoming a playing field for technology companies, gaps in regulatory accountability will undoubtedly occur. How innovation is enabled to bring about transformation from within the energy sector while balancing the benefits offered by external innovation drivers is going to be highly rewarding but challenging.
Regulators need to issue derogations more efficiently so that new entrants are not inhibited. At the same time technology must now help new entrants to understand the ever changing regulatory landscape.
Trend 5 – Energy companies leading the charge in decarbonisation
With the pressure from the government’s Net Zero law, the energy industry has a massive obligation in the drive towards national and global decarbonisation. Providing stable, reliable power and heat to homes is an essential service which must now be delivered while minimising the harm caused to the environment and ecology. A transformation is needed both in terms of demand, through further encouraging energy savings and more push on efficiency as well as putting in place the new concepts that will define an energy system which can sustain people’s needs perpetually.
Organisations and government will need to work together to create better governance processes and actionable policies. Organisations must review how their current operations are aligned with decarbonisation goals and establish change portfolios to bring these in line. Where policies and regulations need to flex, regulator and the government must set clear policy positions that enable the industry to self align and to set exemplary standards for industry wide decarbonisation. Without such actions it is likely that different rule sets are developed at the cost of whole system accountability, further delaying meaningful change against a pressing climate crisis.
The common thread across these trends is that the energy industry is facing a challenge of rapid reinvention and reinvigoration. Operational maturity in whole system change and use of policy and regulation as an enabler for these changes will play a role in determining the winners and losers emerging over the short to medium term.
Our passion for bringing about a better world through our expertise in energy regulations has led us to create CodeWorks – where you will find energy regulations in a digital format, in one place. A RegTech platform for simpler rules, faster decisions and more impact.