Let Analytical Software Give You the Competitive Edge in a Changing Energy Market

By understanding consumption behaviour, a more competitive edge will be created in the new energy market.
Published: Tue 29 Sep 2015

Several energy markets have been liberalised over the last two decades, and many more are about to take the next steps in introducing clearer splits between infrastructure monopolies and a free market place.

Consumer trends impacting traditional energy markets

These new energy markets are beginning to see a new wave of energy services and energy products. It is no longer about simply buying kWh. Customers expect market players to approach them in a more innovative way when it comes to the sale of electricity.

“This tendency or expectation in the market is getting stronger. There is more liberalization in various geographies and as a result, new ways of thinking about end customers and their changing needs are being created,” explains   Edgeir Aksnes, EVP Business Development, Enoro, who will be co-presenting the upcoming webinar,  A New Energy Market Is Emerging-How Can Analytical Software Help You Take Part In It? “The end customer is going to have a major impact on what’s going to happen in the market over the next few years.”

Mr Aksnes points to a report from Accenture “The New Energy Customer Handbook” which highlights the fact that end consumers are happy to purchase electricity from companies other than their utility company. In fact, 73% of the respondents were willing to go elsewhere for their electricity. Interestingly, almost half of these respondents are happy to purchase electricity from an online market player.

“Online purchasing of electricity is about to occur through national hubs where there is a separation of the monopoly and retailer. This is creating a whole new role in the value chain. These hubs are creating broker services.”

In Sweden, for instance, customers can sign up to a web portal which is not an energy supplier or retailer but they have back-to-back agreements with all the players.

“This shows that these new market players have the ability to influence the traditional value chain. Over 100,000 consumers have already signed up for this service.”

Another innovative way to sell energy is to get customers to buy it as part of an integrated package which includes consumer goods. For instance, Tesla electric vehicles are being sold with the free usage of the company’s super charger station network. Electricity is included as part of that product package.

Affordable key technologies enable end customers to have more impact in the energy market

Renewable micro-production and cheaper energy storage is going to see new volumes of consumers evolving into prosumers, thereby encouraging the establishment of microgrids. In Bavaria for instance, over 444,000 houses have installed rooftop PV. This has seen a major growth in the number of prosumers.

Combined with smart metering and Internet of Things, there are clear indications that classical energy products will have to change and take new shapes. With new market players like Tesla introducing home batteries, the gap between the energy price and overall price paid on the bill will widen. The value chain has transformed from one directional to two directional, thereby creating a whole new market place.

There are also instances where several areas of the value chain can now be skipped to reach the end consumer. Based on consumer behavioural changes and new technology like storage systems, micro-production will cause a major disruption in the existing value chain.

Data insights and smart solutions supporting commercial opportunities in new energy markets

During the webinar, Enoro will discuss how to understand and predict new trends using data analytics.

“We have to work with energy customers to understand the trends and new ways of thinking. Our aim is to get better insights into what customers are doing, measuring the profitability of trends and predict what new offerings should be,” explains Mr Aksnes.

By gathering consumer data, Enoro enables the energy market to predict future trends in the market. They have labelled this utility data analytics as ‘Enoro Utilytics’, the purpose of which is to increase customer insight (understand customers’ energy behaviour in order to create new segmentation and follow profitability and prevent churn), increase market competitiveness (energy forecasting, settlement and portfolio analysis, clustering based on current trends) and support energy players in reaching end-consumers (stimulate new energy services such as micro-production).

“By understanding customers’ consumption behaviour, a more competitive edge will be created in the industry.”

He adds, “We have been pioneering and enabling the liberalised energy markets in Europe together with 400 utilities. Together with forward-looking utility companies, we see new ways to understand customer behaviour, how to leverage smart data and how to use this commercially.”

Webinar co-presenter, Sami Niemelä, Product Line Manager Utilytics, Enoro, will talk in detail about the merits of customer segmentation and basing it on energy behaviour.

He says that many energy companies are not basing segmentation on energy behaviour. “Data is necessary for a detailed analysis on customer behaviour. This is an underused asset in our opinion.”

“From hourly metering data we can calculate an end customer’s usage pattern. Data gathered from a customer behaviour analysis, a set of consumption classifiers will produce useful behavioural profiles. A detailed level of data can give an even better view of customer behaviour for better understanding.”

He points out that if segmentation is done based on consumption patterns, customers with a similar consumption behaviour can be clustered together. By doing this, it is possible to see the profitability of customer segments at certain periods. Based on this, it is then possible to analyse customers that are causing low profitability margins for instance. Once these segments have been pinpointed, utilities are then able to do something about low margins by selling the customers new services or products to improve profitability.

Mr Niemelä says that Utilytics provides a competitive edge in the energy business and with the insights, new segments can also be created.

To understand the merits of segmentation based on consumption patterns and how grid companies, commercial companies and end customers can save money and gain profits, register for the webinar here.

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