Perspectives

Connected customers

The transformation imperative for utilities in a digitally disrupted world

The Internet of Things (IoT) is beginning to transform the power and utilities industry, with customers, employees, and assets all becoming increasingly connected. In the first of our series, we look into how the connected customer will drive change in the industry and what energy companies should do to respond.

Delivering the value of the connected home

The connected home has started to take off in both consumers' minds and their living rooms. The Deloitte Consumer Review: Switch on to the connected home report suggests that 52 percent of people own some form of connected device and 66 percent agree that connected technology has the potential to transform their lives. Energy companies are well placed to realize the true promise of the connected home and help move customers beyond basic remote control but they need to be clear about where to play. Opportunities exist across the value chain and each has different organizational implications.

The most obvious opportunities relate to providing the technology itself and from helping customers get the most out of it:

  • Customer management – At the most basic level, selling, installing, and supporting smart technology, such as thermostats, and lighting, providing an incremental revenue stream to energy organizations increasingly under pressure on commodity margins. This is likely to be a relatively short-term strategy, however.
  • Home service management – Delivering value to the customer depends on using smart technology to its full potential. There are two things that energy companies could do to help realize this:
    • Acting as the integrator – The connected home ecosystem is still very fragmented, with multiple organizations using divergent platforms for different technologies. 
    • Providing insight and intelligent automation – Combining information from connected devices with usage information gained through smart meters and billing systems could provide energy companies with a unique market advantage. Energy companies could provide value-driven consumers with the insight they need to manage down their usage and automate key parts of their lives, whether it's turning off the lights or locking the door.

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Distributed energy management: staying relevant in a changing world

If the connected home helps energy organizations remain relevant in today’s world, what about the future?

Two developments already underway—micro-generation and storage—could turn the energy industry on its head. Plus, the two have the potential to deliver a third and possibly more exciting opportunity for energy companies—distributed energy management.

One of the main hurdles to deploying even more distributed solar is being able to store the generated energy and use it at the right time. The sun generally shines in mid- to late afternoon when a homeowner has lower demand for energy, meaning that the generated energy gets exported, while the energy a homeowner uses in the morning and evening has to be purchased at higher, peak-time prices.

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Where next for energy companies?

Building these capabilities can help position energy companies to capitalize on connected home developments; however, they also need to build the right organization and culture to operate under the new paradigm, and this can be quite challenging. Energy companies aren’t often thought of as innovators, but this is precisely what they need to become as they look to incorporate retail, trading, wholesale, and generation elements into daily operations.

Fundamental to achieving the desired results will be a culture, which for some in the sector will mean moving from being a risk-averse commodity supplier with a centralized, command-and-control structure to an agile, cross-functional innovation leader.

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