accenture new energy consumer final

7/24/2019 Accenture New Energy Consumer Final

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The New Energy Consumer

Unleashing Business Value in a Digital World


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2 Contents

Introduction 3

Forces shaping the energy marketplace 4

Unlocking the digital value of the new energy consumer 14

Extending the value proposition 28

The digital energy platform (r)evolution 36

Thriving in the digital energy era 44

References 50

Contents


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The New Energy Consumer: Unleashing Business Value in a Digital World 3

Energy providers around the globe are operating in a whole new

world. Everything and everyone is increasingly connected. Energyconsumers are embracing innovative technologies and takingon new roles as both buyers and sellers of energy. At the sametime, a host of threatsfrom traditional competitors as well asnew market entrantsare challenging utilities to become moreinnovative and more agile.

In The New Energy Consumer: Unleashing Business Value ina Digital World, Accenture shares the latest results of ourmultiyear New Energy Consumer research program. Our findings

and analysis point to important shifts and highlight growingopportunities for forward-thinking energy providers. Above all,they reinforce the importance of the digitally engaged consumerand the need for energy providers to stake their claims in thedigital energy ecosystem.

Introduction


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4 Forces shaping the energy marketplace

Electric, gas and water utilities are surrounded by changefrom

rapid advancements and widespread adoption of distributedgeneration and smart technologies to product innovation, game-changing partnerships and converging markets. At the same time,consumers values and preferences continue to evolve. In the faceof so much change, where will energy providers find new growth?How will they reduce costs? And what new approaches can theyadopt to better serve consumers?

While opportunities and challenges vary by region, every providerneeds to take deliberate actionembracing a bold vision and

reformulating strategies for understanding, reaching and engagingenergy consumers. In doing so, it is crucial to keep a keen eye onfour key forces shaping energy markets around the world:

Connected everything

Personalized energy

Asymmetric competition

Shifting regulatory frameworks

Forces shaping theenergy marketplace


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Everyday objects are being embeddedwith sensors and combined with intuitivevisualization, yielding new insights intoconsumer habits and behaviors. A growingnumber of consumers are filling theirhomes with connected devices and, insome cases, they may not even realize it.Kitchen appliances, thermostats, lights,locks, phones and televisions are becomingsmarter and more interconnected. In fact,almost all energy consumers now use some

type of connected device in their day-to-day lives. Doing so offers easy access toinformation, empowering consumers tomake faster, better decisions on their ownterms. With smart devices, consumers canchoose between being highly informed andinfluential or adopting a simple, effortlessset-and-forget mindset.

All the while, the digitization of everythingis becoming a reality. The 2015 AccentureTechnology Visioncites organizationsunprecedented leap forward in the

journey to becoming digital businesses.1Together, such organizations arecreating a hyper-connected worldaWe Economyin which companies,consumers and everyday objects candigitally interact with each other.

The We Economy offers savvy companiesnew strategies to compete and winin a digital world. It also offers richopportunities for businesses to collaboratewith other players and consumers toplace betson new products, services andexperiencesthat were not possible one ortwo years ago. Today, the We Economy canshape new markets at scale.

Connected everything has raised the

bar, with consumers who now expectchoice, control and convenience. Leadingenergy providers are leveraging digitalcapabilities to meet those expectationswhile strengthening consumer engagementand delivering tailored experiences thatultimately support long-term consumersatisfaction. In the We Economy, winningenergy providers will be those that thinkand act differently. No longer relying ona single idea, technology or organizationto achieve success, they will positionthemselves at the center of the emerging

digital energy ecosystem.

Connected everything

From wearable computers to sensors in sports clothing, thephysical world is coming onlinealtering how consumers liveand work and driving new opportunities for energy providers.


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Ease of access and energy self-sufficiencyare becoming top of mind for consumersopening opportunities but also posingthreats for energy providers.

Energy is reaching new levels ofconvenience for consumers and energy isbecoming less centralized, with consumerstapping into non-traditional sources ofenergy. Evidence of personalized energy iseverywherefrom the increasing consumer

adoption of home generation solutionsvia solar panels and electric vehicles (EVs)combined with increasing battery storageto the emergence of microgrids. Some referto this as the democratization of energyand anticipate that, in the future, themajority of energy will be generated in thehome with only back-up needs and largeindustrial power being produced centrally.

With personalized, convenient energy topof mind, retailers are getting into the act:IKEA now offers a line of wireless charging

furniture that lets consumers chargetheir smartphone by simply setting it ontheir desk,2while BirkSun has equippedbackpacks with a solar panel for chargingcell phones.3Energy consumers on themove in San Francisco and London havethe ability to charge their smartphoneswirelessly at their local Starbucks coffeeshop.4There is also a new technology thatcan turn any window or sheet of glass intoa photovoltaic (PV) solar cellsuggestinga not-too-distant world in which newhomes and office buildings, new cars, and

even new smartphones and tablets couldgenerate their own energy.5

While that world may still be in the future,the current reality includes decliningsolar technology prices, new leasingand financing models to become powerself-sufficient, and growing adoptionamong consumers. Solar can be foundeverywhereacross rooftops and awnings,as well as roadways and in EVs. As solargrows in popularity, prosumers (those whonot only consume but also generate andsell energy) are gaining critical mass. At the

same time, EVs are creating a new breedof prosumers who use energy services invarious places and in varying quantities.From an energy providers viewpoint, EVsrepresent an opportunity to increase loadand revenue generation while extendingreach beyond the home.

As digital technologies are increasinglyapplied to the energy infrastructure andprosumers adopt distributed generationand storage solutions, grid technologieswill become increasingly more distributed.

Utilities executives are expecting tosee greater growth in the developmentof microgrids in the next five years. In2014, the number of utilities executivesexpressing that view nearly doubled to66 percent from 35 percent in the 2013survey.6However, according to The NewEnergy Consumer: Unleashing BusinessValue in a Digital World, consumerknowledge of microgrids is low: two-thirdsof consumers do not know what a microgridis. Engaging prosumers to advancetheir knowledge and understanding ofdistributed energy resources will becomeincreasingly important as these solutionsare proliferating. With companies such asAlevo7offering battery back-up systems,Teslas Powerwall Home Battery with7kWh or 10kWh of storage, and the100kWh Powerpack can only serve toaccelerate energy storage adoption.8

Emerging platforms will likely facilitatedirect transactions between energyconsumers and distributed energyproducers, such as homeowners with solarpanels or farmers with wind turbines, whooften generate more power than they need.

In much the same way that Airbnbsplatform disrupted the hospitalityindustry by directly connecting hosts andtravelers, platforms will enable neighbors

to buy and sell power directly from eachother. As more energy solutions emerge,consumers may shop around for the bestdeal on their electricity, especially if localgeneration offers a more compelling valueproposition. Utilities have an opportunityto decide whether to participate andwhat role they will play in maintainingplatforms or otherwise facilitating theselocal, peer-to-peer transactions.

For energy providers, the prosumersegment is quickly advancing from simply

an interesting concept to a multifacetedreality. As more consumers becomepower generators and the traditionalone-way flow of power becomes bi-directional, more complex and interactiverelationships with consumers are required.

In short, all consumers have opportunitiesto play a more dominant, pivotal rolein the energy ecosystem. They enjoygrowing choice around the source of theirelectronswind, solar or even landfillgenerationand, in competitive markets,

they can select their energy provider.Personalized energy will continue changinghow consumers interact with utilities and,ultimately, how a utility runs its business.

Personalized energy

As a broad spectrum of energy products and services becomesinterconnected, consumers awareness and needs are on the rise.


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For core energy and new products andservices, energy providers now facecompetition from all directionsstartupdigital retailers, telecom giants andprosumers, as well as incumbent utilities.In some markets, incumbent providershave adopted a strategy to pursue a dual-fuel bundle offering consumers extendedproducts and services. However, with thecost of innovation at an all-time low, newplayers are entering both regulated and

deregulated markets:

In a bid to capture the behind-the-meter market, a growing list ofblue-chip vendors, including Apple,ADT, Google (after it acquired Nest),Samsung, Verizon and Walmart, arepartnering with incumbent hardwareand software providers to develophome Internet-of-Things ecosystemsto usher in a new phase of homeenergy management solutions.9

A visit to Kickstarter10

reveals numerousstartup companies seeking funding forhome entertainment/security systems,smart house keys and a hands-freeVoice over IP (VoIP) call recorderany ofwhich could theoretically be connectedto a utility-owned platform to deliver asimpler and better consumer experience.

Pure digital competitors, such as BounceEnergy11in Texas and Powershop12inNew Zealand, may be unencumberedby legacy investments and regulatoryrequirements with which traditionalutilities must contend. Using a digital

platform, these new companies delivera modern experience, offering energypackages consumers valueand theirsignificantly above-average customersatisfaction scores validate theirinnovative approaches.

Solar solution companies are offeringcompelling value propositions toconsumers that may require energyproviders to innovate to deliver

renewable products and services in a newway, such as offering community-basedsolar services. The complexity of helpingconsumers understand their energycontext will be compounded as moreconsumer-grade storage technologiesbecome available.

New entrants in some competitivemarkets are leveraging automatedcomparison of retail versus wholesalemarket prices to gain market sharethrough robotic switching and collectionswitching services.

The playing field for these diversecompetitors is far from level, and thesedifferences in capabilities and constraintswithin the market epitomize asymmetriccompetition. Although utility incumbentshave the edge when it comes to economiesof scale and years of experience in refiningenergy delivery, digital energy startupsbenefit from agility and risk tolerance andmay not have responsibility for energydelivery. They are also well positioned totake advantage of new technologies for

a seamless consumer experience acrossdigital channels.

By nature, digital startups benefit fromthe proverbial clean slate. Able to designinternal operations and processes aroundconsumer needs, they can choose where,when and how to automate transactionalprocesses. In addition, as new energyretailers, they avoid many of the overheadcosts borne by a traditional utility. Thislower cost of entry has made it easierfor digital energy retailers to enter themarket. In the United Kingdom, for

example, the number of retailers has beengrowing, with some playing the marketby buying energy in the spot marketand then passing those savings on toconsumers. Admittedly, not every utilitycan be a pure digital retailer, but almostevery provider can learn from how theseretailers interact with their consumers.

Asymmetric competition

What energy provider would have anticipated competingwith Apple or Google for consumer mindshare aroundhome energy management?


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In addition to threats from digital energyretailers, energy providers are now sparringwith telecommunications giants, techinnovators and other competitors thatwould have been unthinkable a decadeago. In the quest for consumers, thesenew entrants are offering a variety ofenergy and home management productsand servicesand leveraging consumer

information to provide valuable insightsand recommendations. Apples HomeKit13and Googles Nest14 are currently vyingto become the smart thermostat ofchoice. They are pursuing this market notbecause controlling a homes temperatureis lucrative but because each wants tobecome the platform on which all of aconsumers in-home interactions occur.

In Europe, Deutsche Telekom is testingits Qivicon product15an open platformintelligent home automation system thatcan unite products from a number ofcompanies, including electricity suppliersand manufacturers of household appliancesand consumer electronics, as well asproducers of health-oriented solutions. TheQivicon platform creates a link between the

various devices and functions that can thenbe accessed through an application on asmartphone, tablet or computer.

Asymmetric competition reflects a hostof new and, in some cases, unexpectedthreats. For innovative energy providers,however, it also creates a market for newproducts and services.


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Regulatory bodies are facing continuedpressure to confirm reliability, security ofsupply, energy efficiency, affordability andlong-term market predictability. Among thekey drivers of change: rising energy pricesand higher consumer awareness; increasedadoption of distributed energy resourcesand the integration of renewables;growing reliance on demand response;the needs of the modernized grid; and

infrastructure investment recovery. Inresponse, many jurisdictions are drivingfundamental change through retailmarket liberalization, alternative utilityrevenue models and performance-basedremuneration. While each country hasdistinctive priorities, common challengesand opportunities exist around theimplications of the new energy consumer.

In many markets, changing policies aroundprice regulation, affordability and consumerinformation transparency are drivingchange. Competitive market structures arecontinuing to expand globally. The journeyto retail competition underway in a numberof countries (see Figure 1) is bringing awave of change for consumers and energyproviders alike.

Shifting regulatory frameworks

Around the world, regulatory frameworks are being rewritten toanticipate rapidly changing consumer and industry needs.

Figure 1. State of global retail competitive electricity markets.

Low High

Degree of competition

Moving to competitive market

Ireland

UnitedKingdom

Finland

Australia

JapanSouth Korea

Singapore

Malaysia

France

Spain

Canada

ItalyAustria

Czech Republic

Denmark

Portugal

Belgium

Netherlands

Norway

Sweden

Northeast USA

Germany

Hungary

New Zealand

OregonTexas

Source: Accenture analysis.


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For some, the journey is alreadyunderway. For example, Portugal hasbeen implementing its competitive marketstructure since 1995, and eliminated theregulated tariff to end consumers in 2013.For consumers with contracted power upto 10.35kVA, a transition period is in placethrough December 31, 2015.16Elementsof consumer engagement are yet to be

determined; for example, how quickly andto what degree prosumers will emerge, andwhat will drive consumers to implementenergy-efficiency initiatives. However, theremoval of the regulated tariff is consistentwith a well-functioning retail marketin which customers can benefit fromcompetition and innovation.

While Japan is also ramping up its open,competitive retail market structure, itis much earlier in its journey. Japan isconsidering allowing residential and small

and medium businesses (SMBs) to choosetheir gas suppliers by 2017,17as well asopening up electricity markets18in thehope of encouraging greener energy,reducing costs and preventing future powershortages. Japanese energy consumers haveshown interest in finding ways to reducehousehold energy use, save money on theirbills and buy power from 100-percentrenewable sources. Deregulation will createopportunities for new providers to helpcustomers meet these goals.

In the United Kingdom, the focus hasrecently been on long-term consumervalue with the introduction of new marketrules to simplify the choices offeredto consumers and to increase pricetransparency. The goal is to encouragehigher levels of consumer choice. Each ofthe six large incumbent energy providers

may offer no more than four tariffs perfuel type and must inform consumers ofthe best deal. In addition, consumer churnor switching has increased in 2015 overprevious years, with a larger percentageof customers who switched opting forsmaller players.19This appears to be theresult of the changes and the proliferationof comparison sites that are making

information consistently more transparentto consumers.

Another interesting development inthe United Kingdom is the evolution toprinciple-based regulation following asimilar approach to the financial servicesindustry. The regulator has introducedstandards of conduct that require suppliersto treat their customers fairly. Energyproviders are accountable for implementingthe principle, embedding fair treatment ofcustomers throughout their organizations.20

While there are many benefits to acompetitive market model for consumersand providers, distributed energy resourcesand systems are fundamentally reshapingcompetitive and regulated markets. Astechnologies advance and their price pointsbecome more palatable for consumers,pressure on existing systems is increasing.Deutsche Bank estimates that rooftop solarwill reach grid parity in all 50 states inthe United States by 201621and, by 2017,grid parity will be realized in 80 percent

of global markets.22In response to risingconsumer adoption, the speed and scale ofregulatory change will influence the long-term value available to both customersand energy providers. Multiple marketsaround the globe are making fundamentalregulatory changes, affecting business andrecovery models.

In New York, regulators have undertakenthe Reforming the Energy Vision (REV)initiative aimed at reorienting the electricindustry and the ratemaking paradigmtoward a consumer-centered approachthat harnesses technology and markets.23The vision is to develop a distributedsystem platform to animate a marketwhere distributed energy and traditional

energy organizations can competeto promote system-wide efficiencyand reliability, regardless of preferredenergy source, and increase consumerknowledge of energy management.

Recently, the California Public UtilitiesCommission (CPUC) revisited the approachto plug-in electric vehicle (PEV) charginginfrastructure within its jurisdiction.In December 2014, the CPUC endorsedan expanded role for the incumbentutilities in developing and supporting the

PEV charging infrastructure. The intentis to encourage expansion of electricvehicle-related infrastructure and thewidespread deployment and use of PEVs.24Further, Colorado recently introducedBill 1250, which prioritizes developing aperformance-based regulatory system thatwill drive innovation and promote economicdevelopment in a variety of technologies.25


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As other jurisdictions grapple withemerging technology, renewable energyor approaches to electrifying ruralareas, we continue to see regulatoryinterventions. For example, as Germanylearns from its experiences undergoingan energy transition, it is now looking toreforms to protect consumers and furtheradvance market innovation. Last year, the

German government approved a sweepingchange to its well-known green energytransformation to reduce subsidies forrenewables and stem rising electricityprices. Under the plan, Germany plansto meet 80 percent of its energy needsthrough renewables, while producers willgradually have to sell their green energycompetitively on the market rather thanenjoying regulatory protection.26

Lastly, in response to the impact of risingretail prices, the advent of distributed

energy and growing concerns aroundconsumer protection, Australia has movedto change network pricing rules. Theultimate goal of the reform: network pricesthat better reflect the costs of providingnetwork services to individual consumers.This move will likely allow consumersto make more informed decisions abouthow they want to use energy servicesand the technologies they invest in tohelp manage their consumption.27

Current regulatory activity demonstratesthat both the pace of change and theapproach will vary by jurisdiction. However,the power of the consumer to influencethe energy marketplace is universal. Morethan ever, market structure developmentsare having profound implications onthe energy providers ability to maintainand enhance the consumer relationship,

as well as the strategies and businessmodels of the future. Leading energyproviders are proactively engagingregulators and a host of stakeholdersto help shape the energy ecosystem.


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In architecting a future-forward strategy,every energy provider should considernot only the implications of these macroforces, but also the evolving values andpreferences of each new energy consumer.

How can energy providers addresschanging consumer values and preferences?Unlocking the digital value of the newenergy consumer is key. The sectionsthat follow explore the ways in which

energy providers can better understand

and capture digital value. Opportunitiesfor energy providers to extend the valueproposition are also identified, includinginnovative offerings to engage energyprosumers and the growing potentialof platform-based models in the digitalenergy ecosystem.

Moving forward

The We Economy, greater consumer choice and access, diversecompetitive threats and market environments are radicallyshaping the energy marketplace today.


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14 Unlocking the digital value of the new energy consumer

Digital is changing the nature of consumerengagement across the customer life cycle.Whether to educate consumers, sell new products,encourage self-service or create value with newservices, digital must be considered as part ofevery initiative.

Unlocking the digitalvalue of the newenergy consumer


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It is no secret that digital has transformedhow consumers behave, learn, researchand engage with companies. Digitalcontinues to disrupt customer servicedelivery, as well as product and servicedevelopment. Energy consumers areincreasingly embracing digital ontheir owngoing digital for customerservice and, in competitive markets, for

comparing and switching providers.

In some industries, the distinction betweena digital consumer and a non-digitalconsumer no longer exists. Consumers havepassed a tipping point of mass adoption ofself-serve and digital engagement and yet,in this industry, energy providers may notyet be seeing consumers adopt digital atthe same levels. Accentures latest research

shows that only 44 percent of consumersare currently digitally engaged (digitallyengaged consumers are those who haveinteracted through digital channels over thepast year). So why should energy providersfurther invest in capabilities to digitallyengage consumers?

Our survey results show that digitallyengaged energy consumers can unleashsignificantly more business value for energyproviders than those who do not use digitalchannels (see Figure 2):

Higher trust. 41 percent of digitalconsumers state that they trust theirenergy provider to help them optimize theirenergy consumption, versus 31 percent ofnon-digital users.

Higher satisfaction. 69 percent of digitalconsumers indicate that they are satisfiedwith their energy provider14 percentagepoints higher than those who do not usedigital channels.

Higher likelihood to recommend. 42percent of digital consumers indicate thatthey would be willing to recommend orpromote their energy provider, compared tojust 13 percent of non-digital users.

Higher likelihood to share personal

information. Digital consumers are about1.5 times more likely to share their personaor energy usage information than non-digital users.

Figure 2. The digitally engaged energy consumer unleashes more business value for energy providers.

Digital users

13%55%

48%

53%

73%

42

%

69

%

70%

59%

80%

51%

73%

31%

41%

more likely to sign upfor

automated home energy

management devices or services

morelikely to participate

in an energy management

program

more likely to sharetheir

personal information and

energy usage information

morelikely to recommend

their current energy

provider

more satisfiedwith

their energy provider

more trustin their

energy provider

more likely to sign

upfor home energy

generation products

Non-digital users

Digital users

Base: All respondents.Source: Accenture, New Energy Consumer research program, 2015 consumer survey.


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Higher likelihood to participate. 80percent of digital consumers indicatedthey would participate in an energymanagement program, compared to 59percent of non-digital users.

Higher likelihood to sign up for energy-

related products and services. 70 percentof digital consumers indicated they wouldsign up for automated home energymanagement devices, compared to just 48percent of non-digital consumers. Digitalconsumers are nearly 1.4 times more likelyto sign up for home energy generationproducts compared to non-digital users.

Clearly, energy providers have much to gainfrom building a stronger digital relationshipwith consumers. Many providers haveinvested in improving website designs,developing mobile applications, buildingsocial media engagement and strengtheningdigital marketing capabilities. Yet, digitalneeds to be the engine of every business.

Now is the time for energy providersto take a strategic, systematic approachto transforming their operationsso they can unlock the value of digitalenergy consumers.

Trust is a mustWith many energy providers redefiningtheir role in consumers lives and moving tothe digital world, a foundation of consumertrust and satisfaction is increasinglyparamount to success. Accentures researchshows that, overall, energy providers remainwell-positioned in the minds of consumersas trusted advisors on optimized energyconsumption (see Figure 3). As the energyecosystem continues to expand and newproducts and services are introduced, thetrust advantage can be a valuable assetthat provides strategic advantage over newmarket entrants. Further, it positions energyproviders as potential strategic partnersfor retailers, equipment manufacturers andother home service providers that havelower levels of consumer trust.

Figure 3. While the opportunity to improve consumer trust remains, utilities/energy providers are still better positioned thanalternative providers.

51% 46% 47% 55%

51% 49% 34% 53%

48% 49% 38% 54%

37% 24% 33% 28%

33% 24% 28% 30%

31% 22% 21% 22%

26% 15% 17% 15%

21% 14% 19% 14%

What organizations do you trust to inform you about actions you can take to optimize your energy consumption?

2pts

1pts

% Trust

2012 201120132014

8%

8%

11%

17%

23%

15%

19%

17%

44%

44%

43%

47%

46%

55%

56%

61%

48%

48%

46%

36%

31%

30%

25%

22%

2015

3pts

3pts

1pts

2pts

1pts

1pts

Do not trust Neither trus t nor distrust T rust

Consumer associations

Academics/schools/scientific associations

Environmental associations

Government/governmentalorganizations

Utilities/energy providers

Online service providers

Home service providers

Retailers/equipment manufacturers



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There is a marked difference in consumerstrust in their energy provider to informthem about actions they can take tooptimize their energy consumption betweencompetitive and non-competitive markets.In competitive markets, consumer trust was28 percent whereas, in regulated markets,trust was 44 percent. Regardless of marketstructure, utilities and energy providers

remain better positioned than alternativeproviders (see Figure 4).

What factors matter most to consumersin building trust with their energyprovider? The vast majority of consumerssurveyed indicated consistentlygetting the bill correct (92 percent),receiving reliable energy delivery (91percent), and getting clear and easy-to-understand pricing information (91percent) were the most important.28

Looking into customer satisfaction, 61percent of consumers noted that they aresatisfied with their energy provider. Trustand satisfaction are both significantlyhigher for digitally engaged consumersversus non-digital consumers (see Figure 5).

Trust and satisfaction are key components,no matter which strategy an energyprovider pursues (for more information,see sidebar: The four keys to digitaltrust on page 18). By focusing ongetting the basics right and eliminatingareas of dissatisfaction, energy providerscan establish a strong foundation forenhancing the customer relationship.

Figure 4. There is a marked difference in trust of utilities/energy providers across competitive and regulated markets.


What organizations do you trust to inform you about actions you can take to optimize your energy consumption?

Consumer associations

Academics/schools/scientific associations

Environmental associations

Utilities/energy providers

Government/governmental organizations

Online service providers

Home service providers

Retailers/equipment manufacturers

% Trust 2015

Regulated marketsCompetitive markets

% Trust 2014

51%

44%

41%

28%

27%

22%

19%

18%

46%

54%

53%

44%

36%

39%

32%

26%

53%

44%

40%

29%

29%

23%

19%

18%

49%

59%

55%

46%

38%

39%

33%

25%

Regulated marketsCompetitive markets

Digital channel users

Non-digital channel users

Trust41%

69%Satisfaction

Trust31%

55%Satisfaction

Figure 5. Digitally engaged consumershave more trust and are more satisfiedwith their energy providers.

Base: All respondents.Source: Accenture, New Energy Consumer research program2015 consumer survey.


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For many companiesfinancial services,healthcare and energy providersdigital

trust is central to the customer relationship.As consumers rapidly adopt new devices,unprecedented levels of personalinformation about consumers and theirhabits, preferences and households areavailable to businesses and their partners.The amount of information businessescan collect and leverage is explodingmagnifying the importance of digital trust.

Accenture defines digital trust as theconfidence placed in an organization

to collect, store and use the digitalinformation of others in a manner thatbenefits and protects those to whomthe information pertains. Increasingly,customer operations are the digital face toconsumers. Energy providers websites areportals for self-service and, in competitivemarkets, they are fast becoming thefirst stop for researching offers.

A breach of digital trust or a cybersecurityincident can quickly result in harmful

business consequencesfrom branderosion to consumer alienation andchurn. As energy providers look to drivefurther digital self-service adoption andeven create new businesses based ondigital platforms, all four keys to digitaltrustsecurity, accountability, privacy/data control and benefit/valueshould beon managements agenda (see Figure 6).

The four keys to digital trust

Figure 6. The four keys to digital trust.

Source: The Four Keys to Digital Trust, Accenture, 2014.

Privacy/Data Control

Company data policies

Third-party data sharing

M2M data sharing

Regional cultural expectations

Government access

Benefit/Value

Customer value

Services in-kind

Revenue

Brand value/loyalty

Customer service

Security

Malware/virus protection

Proactive data integrity/hacking prevention

Data permissions and

user identityData encryption standards

Data access logs andkey storage standards

Data connections (VPN, SSL, etc.)

Architecting resiliency

Accountability

Self-governance

Reactive data integrity/legal resource

Global and regional datastandards

Government requisition

The Four Keys to

Digital Trust


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Data privacy and securityDigital channels are just one aspect ofthe shifting digital landscape. Smartmeters and smart grid technologies aredigitizing supply and distribution, providingvast amounts of customer-related usageinformation. Consumers, regulators andgovernments need to feel confident thatcustomer information is safeparticularlybecause smart meter and connected homedata often provides unprecedented insightinto consumers personal lives. With suchdata, analysts can determine the number ofpeople in the home and how they behavewhen they are there.

However, consumers are willing to sharepersonal information if they trust theenergy providers privacy and securitystandards and if they see value in sharingthe information. Sixty-five percentof consumers are confident that theirenergy provider protects their personaland energy usage data and information(see Figure 7). That level of trust is

relatively high, considering that only 45percent of consumers have confidencein the security of their personal datawhen shared across providers.29

In addition to further increasing consumersconfidence in their data protection andsecurity, energy providers have the chanceto begin testing and using this dataidentifying new ways to deliver valuefor themselves and for consumers. Datamonetization is a growing industry. As justone example, Accenture estimated thatwhile the global market for monetization

of data by telecom in just a handful ofapplications (retail audits, location-basedadvertising and card fraud, among others)was $22 billion in 2013, it could reach $37billion in 2015.30

Figure 7. Energy providers have an opportunity to enhance consumers confidence in data privacy and security.


14%

51%

25%

10%

Very

confident

Somewhat

confident

Not very

confident

Not at all

confident

How confident are you that your energy provider secures and protects your personal data and information on your energy usage?


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Interestingly, our 2015 survey revealed thatdigital consumers are more comfortablesharing their personal data and have agreater degree of confidence in their energyproviders ability to safeguard their data.About three-quarters of digital consumersindicate that they are confident that theirenergy provider secures and protects theirdata and would allow that data to be

shared with third parties (primarily withpermission). By contrast, only a little morethan half of non-digital energy consumersexpress that sentiment (see Figure 8).

As consumers become more digitallyengaged, there may be growingopportunities to leverage customer data.To comply with regulations while buildingtrust with consumers, energy providers

need to be very transparent about how theyare using consumer data and whether andhow that data will be shared with third-party providers.

Energy providers can put the decision ofsharing information back into the handsof consumers with simple, convenientapproaches. For example, San Diego Gas& Electric (SDG&E) has more than 15certified third parties that are part of itsGreen Button Connect My Data program.Through the program, residential andbusiness customers can authorize SDG&Eto share their usage information withspecified third parties on an ongoing basis.Some of these third parties charge a feefor value-added services, such as energyaudits or analytics, while others are free.31

As consumersespecially those whoare digitally engagedbecome morecomfortable sharing their energy-relateddata with third parties, energy providersthat get bogged down in the data privacydebate may miss opportunities. Google,through the Nest Learning Thermostat, isgathering a wealth of home-energy andother behavioral information. To create

and capture value over the long term,energy providers need to stop debatingand start formulating a deliberate andproactive data and analytics strategy.

Figure 8. Digitally engaged energy consumers are more confident about their energy providers ability to secure and protect theirdata and more willing to share their information.


Have confidence in energyprovider to secure and protectpersonal data and informationabout energy usage

Would allow energy provider to sharewith third parties personal informationand energy usage information(primarily with permission)

of digital channel users

76%

of non-digital channel users

57

%

of digital channel users

73%

of non-digital channel users

51

%


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Service design is a newcritical capabilityAs energy providers look to create moreenticing digital experiencesthose that willdrive stickiness of current digital consumersand attract new consumersthey needto reframe the problems and reimaginethe possibilities. One viable approach is

service design. Service design embraces aholistic view of problems and objectivesthat considers the situation, context,business objectives and consumer behaviorsto redesign how consumers interact withthe world around them. It yields digitalexperiences that are simple, innovative andempowering for consumers.

When it comes to engaging digitalconsumers, design is a critical capability.Well-designed experiences go beyondenhancing consumer engagement; theyactually simplify by anticipating servicesand experiences for consumers andenergy providers alike. For example,Internet television network Netflix usedmicro data to predict that the show

House of Cardswould be successfulbefore they started filming it.32

Accenture conducted a pilot with a largetelecommunications company to effectivelyresolve customer inquiries through a digitalassistant that combines live monitoring,artificial intelligence and automationto optimize customer interaction acrosschannels. Live agents supervise andcollaborate with robotswhich handlethe majority of routine interactionsonly

intervening opportunistically or as needed.Combining humans and automationresulted in more than 80 percent ofinquiries resolved online, and employeeengagement and satisfaction increasedas their focus shifted to high-value,non-repetitive customer interactions.33

To date, typical approaches to digital userexperience, system design and developmenhave reinforced a current state andinward-looking mindset defined by todaysprocesses, systems and operations. TheNo. 1 reason customers would want to usetheir energy providers digital channels isquick, convenient service. Yet, 41 percentof consumers still believe the digitalexperience with their energy provider ismore difficult than with their other serviceproviders, with younger consumers morelikely to have that perception (see Figure 9)

Figure 9. Energy providers have an opportunity to improve consumers digital experience compared to other providers.

Base: All respondents who interacted with their energy provider through online portal/website or mobile application over the past year.Source: Accenture, New Energy Consumer research progr am, 2015 consumer survey.

When considering Web and mobile interactions with your energy provider, do you believe your digital experience with yourenergy provider is more difficult than interacting with other types of providers (e.g., telecommunications, retailers, cable providers)?

18-24years

25-34years

35-54years

55+years

48% 52%

38% 21%

41%

of consumers believe theirdigital experience withtheir energy providers ismore difficultthan withother types of providers


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Leading providers will move to aprogressive service design experience,one that begins where the consumerstarts and leads them logically throughthe various methods of service available:online, social, mobile, voice and in-person.Winning digital brands will seek to bridgethe gaps between experiences, services,devices and places. Such gaps cannot be

avoided, but they can be managed moreeffectively through scalable platforms.

For evidence of the power of service design,consider Scandinavian mobile operator 3. Thecompany engaged Fjord to help increaseself-service adoption and improve customersatisfaction by helping consumers trulyunderstand their bills. To that end, 3 useda service design approach to develop amobile application that reinvented how itscustomers view their mobile phone usage

and bills (for more on this approach, seesidebar: Putting design at the heart ofyour digital business).

Recognizing that phones are all aboutconnection with family and friends, theapp offers a view of recent social history,a dynamic phonebook of favorite friends, aview of typical daily usage, and engagingvisualizations of the bill.

This breakthrough innovation has led tosignificant customer adoption, higherengagement (with 70 percent of customersusing the app monthly) and lower callvolumes (half of users report callingcustomer support less often becauseof the app).34

Whether energy providers want to engagedigitally oriented consumers or wish toincrease digital adoption, digital servicedesign is a core capability that transcendstraditional channel strategy (for anexample, see sidebar: Future-proofing aretail energy business).

Fjord, a design agency that is part ofAccenture Interactive, believes thateffective digital design services areessential in this era of the digitaltransformation of everything. To meetever-growing consumer demands,energy providers will benefit from anemotional, customer-centered approachcombined with rational business analysisand underpinned by technology andorganizational transformation.

The 2015Trends Impacting Design& Innovationreport, Fjords annualedition, highlights the impact ofdigital on the real world and exploreshow digital is shaping both consumerexpectations and service design.

It also distills Accentures thinking on ninecore ideas and trends aimed at provoking,informing, inspiring and, above all,providing actionable insight.

Putting design at the heart of

your digital business


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New Zealands Powershopclaims to be theworlds first retail online energy market.35

When launched in 2009, the energyretailer set out to establish a profitablenew business modelone that wouldfuture-proof it against disruptive marketforces, including the risks of new entrants,inevitable and ongoing technology change,and intensifying regulatory pressures.

Leveraging a smartphone app, analyticsand a strong brand, Powershop is winningenergy consumers not only in NewZealand, but also in the highly competitiveAustralian retail market. Powershop

recognizes that to capitalize on commoditysales, it needs to be responsive to theneeds and values of its consumer base.From their smartphones, customers canmonitor home energy consumption, benotified when a consumption spike occursand choose the source of their electricity.Sources include alternative energy projectssuch as wind, solar or even sugarcaneprocessing and landfill generation.

Powershops social media strategy isdesigned with a primary focus on customer

choice, convenience and control. All of itssocial media channels, including Facebookand Twitter, offer consumers effortlessaccess and support, making it easy to dobusiness with the company. Powershopalso uses its social media channels to buildits fun and quirky personality and brand.

Customers can also take advantage ofenergy specials, such as energy that

is discounted for a period of time or amonetary incentive for recommendingPowershop to friends. These specialsare not emailed to consumers; instead,they are shared publicly on social media.This reflects the companys preferenceto engage consumers in a two-wayconversation and incent them to use socialmedia by rewarding them for their likeor follow actions. The retailer is alsoexploring the potential to use its platformto feature quasi-crowdfunding programs,where consumers could invest in energy

projects to offset future energy costs.

Powershops brand and digital campaignsare disruptive, relevant and entertaining,turning many apathetic consumersinto passionate followers. These digitalconsumer-centric capabilities and offeringshave fueled Powershops success inacquiring and retaining consumers.

Future-proofing a retail

energy business


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Mobile on the moveAs energy providers work to transformthe digital consumer experience, mobilityremains central to the digital landscape.Smartphones have become nearly ubiquitousacross geographies and consumer segments.The Accenture Digital Consumer Tech Survey2014found that, globally, 69 percent ofconsumers own a smartphone, and morethan half (52 percent) plan to buy a newsmartphone in the next 12 months.36Thedramatic growth in mobility adoptionparticularly of smartphonesmeans thatconsumers now consider anytime, anywhereaccess as a basic expectation. Whats more,satisfaction with digital experiences isincreasingly defined by what consumers canor cannot do through their mobile devices.

Of course, mobility also creates an extremelycomparative experience. With just the swipeof a finger, consumers can shift betweenmobile websites or applications. Energyprovider apps live alongside banking appsthat have simplified nearly every routinetransaction. In addition to viewing accountbalances and transferring funds to differentaccounts or people, consumers can snap

pictures of checks to deposit them. They alsocan set savings targets and monitor progress,as well as make appointments with bankemployees for more complex interactions.Consumers increasingly expect that samelevel of convenience and ease from allproviders. The bar for mobile experienceswill continue to rise, with a recent AccentureC-suite survey revealing that mobility isthe top area of digital focus among cross-industry executives.37

In the utilities industry, the potential formobility has not gone unnoticed. Thenumber of providers with mobile-enabledwebsites and mobile applications has grownexponentially in recent years. Some providershave achieved considerable success,particularly in geographies where storms andother dramatic weather events have pairedwell with mobile outage capabilities.

In many situations, however, energy providerface a battle for share of screen. In theUnited States, for example, consumersspend more than 30 hours a month usingphone apps and use, on average, 27 differentapps each month.38Standing out in thisdigital ecosystem is no easy taskandour research shows that consumers arequick and unforgiving in their judgment ofmobile applications. In fact, 42 percent ofconsumers say they routinely delete or stopusing mobile applications after just a few

tries (see Figure 10).

Figure 10. Getting the mobile app experience right is critical.

Base: All respondents.Source: Accenture, New Energy Consumer research progr am, 2015 consumer survey.

14%

29%

29%28%You regularly

or occasionallydelete or stop

using applications

after the first try

You delete orstop using

applications after

trying to use them

three to four times

You downloadapplications and

always use them

more than four

times

You do notdownload

applications

42%

Which of the following best describes your use of mobile applications?


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The top two reasons are related tofunctionality issues (see Figure 11).Consumers expect energy providersto seamlessly deliver the appropriatefunctionality in a way that is simple,intuitive and very responsive. Getting themobile app experience right the first timeis critical.

While energy providers may be inclinedto take a wait-and-see or piecemealapproach to mobility, our researchsuggests this approach is becoming risky,as consumers interest in mobility hasreached a tipping point. Sixty percent ofenergy consumers say they would use asimple and intuitive mobile app from theirenergy provider. More specifically, billingand outage capabilities top consumers listof expectations, followed closely by energyusage information (see Figure 12).

Consumers expect their energy providerto deliver a personalized experience thathelps them in some way. That expectationhas been shaped by consumers dailyexperiences with other industriesincludinghealth bands and fitness monitors fortracking and improving health; bankingapps that monitor financial goals andmonitor progress; and music streaming

services, such as Pandora,39

whichlearns an individuals preferences andproduces playlists based on those insights.In our latest research, 62 percent ofconsumers said they would allow theirutilitys mobile application to leveragetheir location information via GPS forvalue-added services. Specifically, theywould support such usage for reportingor receiving outage notifications andupdates, identifying the closest payment

center, and receiving retail promotionsand coupons for energy-relatedproducts and services while shopping.

As mobile apps continue to proliferate,the issue of consumers mobile real estatebecomes a consideration. Successfulmobile app designers not only consider theimplications of adding real estate, but alsodetermine how the wider ecosystem wouldwork with an addition. Providers also havethe ability to offer mobile solutions acrossthe spectrum such as responsive Web, orleveraging social apps to custom apps.

Mobility can enable new value andhelp redefine the energy provider valueproposition. The key is making sure thatconsumers are able to successfully addresstheir needs.

Figure 11. A wide range of mobile dissatisfiers need to be addressed.

Base: Respondents that regularly delete or stop using applications after the first try.Source: Accenture, New Energy Consumer research progr am, 2015 consumer survey.

Did not do

what you wanted

Limited

functionality

Sent you too manynotifications

Too slow

Too difficult toset it up

Not intuitive

Dated

information

Data not

personalized

Usually, what are the main reasons for deleting or not using an application after the first try?

Ranked within top three

53%

42%

40%35%

28%

27%

21%

20%


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Bill display 64%

Outage information 60%

Report an outage in your location 59%

Energy usage information 58%

Account settings and controls 56%

Immediate access to phonesupport if you aren't able tonavigate the mobile experience

53%

Bill payment 52%

Meter reading submission(submit manually or via photo) 51

%

Account profile information 50%

Starting or stopping your service

(move-in-move-out)46%

Help functions within the app 40%

Control and monitor appliances 39%

Energy audit information 34%

Personalized energy-efficiency tips 32%

Online shopping for new applianceswith rewards and/or points 28

%

Option to split bill betweentenants-roommates 26

%

A game that improves yourunderstanding of energy and offersyou rewards

19%

Which features or functionalities would you expect when considering using a mobile application to interact with your energy provider?


Social @ scaleEnergy providers have noticed the growingpower of social networks. In mass outagesand natural disasters, social networks havebecome the primary vehicle for customercommunication and message broadcasting.Social media also has become an integralpart of public relations, corporatecommunications and branding. However,energy providers continue to work todevelop a holistic approach that deliverstangible benefits.

Social can be leveraged as a platform forengaging consumers, gathering data anddriving new revenue. American Expresshas pioneered several successful onlineinitiatives that monetized the features of

social media. They included discounts forlocation check-ins via Foursquare, as wellas discounts through Facebook.40Texas-based Bounce Energy has taken a similarapproach, using Facebook and Twitter ascore customer acquisition channels. Inaddition to special offers for followers,Bounce maintains an ambassador programthat rewards consumers for sharing

corporate marketing content.41

Importantly, social media is not justabout marketing. It also can be a valuablemechanism for gathering consumerfeedback. Energy providers have largelyembraced social listening as a way to judgesentiment and identify early warnings ofmedia and customer service issues.

Social networks can also be a vehicle forcrowdsourcing ideas. Over a one-yearperiod, ComEd ran a social media campaignto help redesign its bill. It created aFacebook app to allow customers to providefeedback on potential designs. When itlaunched the new bill, the entire journeywas driven through social channels.42

Figure 12. Consumers prioritize bill display and outage information as must haves for mobile apps.



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Such social programs will becomeincreasingly important to engagingenergy consumers. Accenture researchshows that the number of consumersinteracting with their energy providersthrough social media is set to doublein the next two years (see Figure 13).

For consumers, social is becoming anotherchannel for learning about products andservices and receiving customer service.Energy providers need to approach thesenetworks accordingly. Success hingeson understanding the relevant socialaudience, mapping customer needs to asocial experience the organization candeliver and, most importantly, confirmingthe organization has the appropriate

capabilities to execute. Successfulenergy providers will confirm that socialmonitoring reports are not treated asinteresting reading. Instead, they willdeliver such reportsalong with actionableinsightsto stakeholders across theorganization. In addition, they will treatsocially-based service not as a side job,but as an integrated channel with tracking

and performance monitoring. And theywill approach social marketing not as anafterthought, but as a central element inplanning and designing every campaign.

With this integrated approach, energyproviders can reap the benefits of socialand may even be able to do so withoutsignificant additional cost or processes.

Creating digital dividendsEven with progress to date, energyproviders have room to improve thedigital experienceand now is the timeto accelerate digital adoption. As energyproviders seek to strengthen and expanddigital consumer engagement, they willneed to change the fundamentals of thedigital experience, from building digitaltrust to designing services to integratingdigital experiences. Doing so will not onlyunlock value from current business models,but also unleash opportunities to offer newproducts and services.

Figure 13. Consumers using social media in the next two years could double.


Are you already using or do you plan to use your energy providers social media (e.g., Facebook, Twitter, blogs, discussion forums)for any of the following actions?

Plan to use in the next 12 to 24 months Already using

24% 23% 24% 22% 24%

16%

13% 12%11% 10

%

Search for informationfrom your energy provider(e.g., finding YouTube video,looking at Pinterest board)

Follow your energy provider(e.g., follow on Twitter,like on Facebook)

Interact with your energyprovider (e.g., commenton Facebook, tweet)

Share content createdby your energy provider(e.g., retweeting on Twitter,reposting on Facebook)

Post a review about yourenergy provider on aconsumer forum (e.g., Yelp)


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28 Extending the value proposition

As adoption of rooftop solar and other distributed generation

technologies increases, consumers knowledge and interestin home energy management solutions is on the rise. Energyproviders have the opportunity to forge new paths to value byexpanding their portfolio of products and services.

Extending thevalue proposition


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Extending traditionalconsumer valueAs consumer and energy providerrelationships become more multifaceted,so does the availability and range ofproducts and services that energyproviders can offer. In competitivemarkets, leaders are blazing the trail

with bundled offerings and connectedhome solutions. For example, Endesa isoffering a wide range of home-relatedservices, such as EV charging stationsand smart communication portals.43

Through our research program, Accenturehas been tracking consumer interest invalue-added products and services and haswitnessed a substantial rise. Driven perhapsby technology convergence or consumersbroader view of the energy ecosystem,consumer interest in signing up for energy-related products and services appears to begaining momentum across the boardwith

more than half of consumers interested ina wide range of products and services fromtheir energy providers (see Figure 14).

No longer are value-added products andservices niche market opportunities.In competitive markets, there areopportunities to create significant newrevenue streams by offering additionalhome-related products and services,extending the value proposition to dualfuel and providing financing plans ormaintenance services. In a regulated

marketplace, opportunities also exist forutilities. Energy providers should considerinnovative partnerships or informationservices as a way to create more value forconsumersand extend the mindshare forenergy-related products and services.

Figure 14. Interest in energy-related products and services has significantly increased over the past year.


% of consumers interested if offered by their energy provider 2014

55%6pts61%

45% 9pts56%

2015

56%66% 10pts

52%62% 10pts

32%61% 29pts

46%60% 14pts

51%58% 7pts

48%57% 9pts

Products and materials to make simple improvements to your home inorder to save electricity (e.g., weather stripping, compact fluorescentlightbulbs)

Home energy generation products (e.g., solar, geothermal, wind)

Home energy audits/consultations to identify opportunities tosave electricity

Installation and/or maintenance services for home energy devices(e.g., thermostat, furnace, water heater, air conditioner, major homeappliances, solar panels)

Natural gas and/or water

Devices or services to automate home energy management based onyour preferences (e.g., remotely control and automate lighting,thermostat, and appliances)

Back-up energy storage or generator (e.g., a battery, fuel cell, dieselgenerator) in case the power goes out

Warranty and/or financing plans for home energy devices (e.g., furnace,water heater, air conditioner, major home appliances, solar panels)


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While interest is high among all energyconsumers, digitally engaged consumersmay represent even greater value. Digitallyengaged consumers consistently express ahigher level of interest, up to 22 percentagepoints higher than their non-digitalcounterparts (see Figure 15).

Accenture believes that we have turneda corner with consumer interest inenergy-related products and services onthe rise, creating new opportunities forenergy providers.

Expanding energyconsumerismAs consumers interest in energy-relatedproducts and services increases, the realquestion is around when and how energyconsumers will expand their purchasingbehaviors beyond the commodity. When

thinking about home energy management,home energy generation, or other suchsolutions and services, approximatelythree times as many digitally engagedconsumers say they will invest in the nextyear (see Figure 16). Energy consumerswho indicate their intention to purchaseor sign up for energy-related productsand services are highest for home energymanagement reports and in-home energymanagement solutions, followed by homeenergy generationrelated products andservices and, finally, EV charging solutions.

Interestingly, consumers also indicate aninterest in financing services for energy-related products and services. As consumeradoption of energy-related productsand services continues to evolve, energyproviders will need to determine theirproducts and services portfolio strategy.

Nurturing the multifacetedsolar prosumerRooftop and small-scale solar installations

are one of the first technologies tobecome a cost-effective micro-generationsolution for residential and commercialconsumers. With the cost of producing,installing and managing solar panelsfalling exponentially in recent years,certain geographies have already reachedgrid parity.

Our New Energy Consumer research programhas sought to understand the increasingmarket for solar-related generation options,as well as the opportunity available forenergy providers. Overall knowledge ofsolar energy products and services appearsto be low, with only about a third ofcustomers knowledgeable about rooftopsolar products and even fewer claiming

knowledge of community solar projectsor solar services. Nevertheless, whileonly a handful of respondents (9 percent)had solar products in 2014, 55 percentsaid they were considering purchasingor signing up in the next five years.44

Given rising adoption and consumerinterest, a variety of innovative companiesare entering the market in an effort todisrupt the traditional utility value chain.We also see a growing array of solar homesolutions and community solar projects, as

well as a host of supporting servicesfromautomated support to financing instruments.In many geographies, energy providershave moved quickly to offer solar productsand services directly or via partnershipsin an effort to prevent margin erosionand/or increase customer engagement.

Based on our findings, energy providersare well positioned to capture value bydeploying solar-related products andservices. While consumers top choice(in 2014) may be specialized providers (74

percent), energy providers were a very closesecond at 71 percent. Further reinforcingthese trends are consumers momentsof truth when making decisions to signup for solar products and services. With46 percent saying they would engagein a discussion when their energy bill ishigher than expected, energy providersalready have a significant opportunityto leverage existing relationships anddata in order to connect with consumersin a more meaningful manner.45

In this context, it is clear that distributedenergy resource solutions like solar are set tobe game changers. Consequently, a growingnumber of utilities consumers should beviewed as partnerswhich introduces a hostof complexities around billing, customersupport and field maintenance. Successfulenergy providers will be those currentlybuilding a prosumer-centric approach anda new platform for creating and deliveringconsumer value.

Getting comfortable in theconnected homeThe connected home has become a realityand consumers have become increasinglyaccustomed to connected devices. Thesedevices are proliferating and, with greaterintelligence embedded within them,consumers can select a set-and-forget

approach, manual control or a happymedium to suit their preferences. Appliancestelevisions, thermostats, lights, locks, phonesand computers are all getting smarterwithenergy remaining the primary connector.

In The New Energy Consumer: Architectingfor the Future, Accenture highlighted thatwhile consumer knowledge of connectedhome devices was relatively low, 53 percentwere likely to purchase monitoring andcontrol services from their energy provider.Consumers indicated that, second only to

companies that specialize in connectedproducts and services, energy providers arethe most preferred providers for monitoringand controlling these devices.

Some energy providers and non-utilityplayers are already entering the connectedhome market through innovation,partnerships and acquisitions. For instance,Facebook has announced it will offer asoftware development kit for the Parseplatform to developers building connecteddevices,46and Apple has announced

its HomeKit solution.47And while theconnected home remains a fragmentedmarket, exciting opportunities areemerging to make energy management soseamless that, in time, it will be invisible toconsumers. A number of utilities and otherproviders are already working to make thatvision a reality:

British Gas. In a deal worth $100 million,British Gas acquired AlertMe, a developer ofplatforms for running smart home devices.British Gas now owns AlertMes Hive

product, which allows consumers to controltheir heating and hot water remotely. Theacquisition allows British Gas to launch afamily of smart home products to bringconsumers innovative ways to help themreimagine how they live in their homes.48


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Figure 15. Digitally engaged energy consumers are significantly more interested in signing up for products and services.


Figure 16. Digitally engaged energy consumers are significantly more likely to purchase or sign up for home energy products andservices in the next 12 months.


% of digital and non-digital users interested in signing up for

52%

48%

57%

53%

52%

51%

48%

49%

Products and materials to make simple improvements to your home in order to save electricity

Home energy generation products

Home energy audits/consultations to identify opportunities to save electricity

Installation and/or maintenance services for home energy devices

Natural gas and/or water

Devices or services to automate home energy management based on your preferences

Back-up energy storage or generator

Warranty and/or financing plans for home energy devices

72%

67%

76%

73%

72%

71%

70%

67%

Digital channel users Non-digitalchannel users

Share of respondents that plan to purchase within the next 12 months

26%

19%

19%

17%

24%

16%

Home energy

management

reports

In-home energy

management

solutions

Home energy

generation

products and

installation

services

Financing services

for home energy

generation

products

Financing for

home-based

electric vehicle

charging stations

Home-based

electric vehicle

charging stations

and installation

services

Digital channel users

Non-digital channel users

10%

8%

5%

5%

3%

4%


32/52


Home Depot. Home Depot has launcheda series of connected home appliancescompatible with its Wink platform. Wink-enabled products are operated eitherthrough the Wink app or the Wink Hub.Through the app, consumers can controltheir air conditioners, blinds, door locksand garage doors. There are no monthlyfees to use the app service and Wink is

compatible with a number of wirelesstechnologiesWi-Fi, Bluetooth LE, Z-Wave,ZigBee and Lutron Clear Connect.49

Although there are currently no clearwinners in the increasingly crowdedconnected home environment, manyplayers are vying for different parts ofthe ecosystem, ranging from platforms tohardware. Energy providers can play a rolein the connected home by determiningwhether it is owning the home orengaging with the ecosystemto support

their primary business objectives.

Plugging in to the EV marketGlobal sales of electric vehicles (EVs) havebeen increasing. Investments from firmssuch as Tesla are driving technologicaladvances, decreasing costs and increasingmileage capabilitiesremoving many ofthe traditional barriers to EV adoption.Meanwhile, Apple is among the major newplayers potentially spurring EV innovationand consumer adoption.50

In The New Energy Consumer: Architectingfor the Future, Accenture explored the risinginterest in EVs and consumer preferencesaround related products and services. WhileEV adoption has continued to grow steadily,forecasts call for demand to increase sharplyover the next five to 10 years. More thanhalf of consumers were considering an EVfor their next car purchase, representing acontinuing opportunity for energy providersto increase revenues and engage consumers(see Figure 17).

When considering the rising interest inconnected home technology and micro-generation, the electric vehicle may beconsidered the unifying technology, providinga true solution for daily energy engagement.

Energy providers have opportunitiesto establish their presence in theEV market. In fact, energy providersare well positioned to be a preferredvendor of home-based EV products andservices, such as those for installation,maintenance and energy management.

Figure 17. More than half of consumers are considering an electric vehicle for their next car purchase.

Base: All respondents.Source: The New Energy Consumer: Architecting for the Future, Accenture, 2014.

76% % of consumers who are planningon buying a car in the next 10 years

53%

are considering buying

an electric vehicle

Within the next 3 years

14%

Between 3 and 5 years

17%

Between 5 and 10 years

22%

59%

Urban48%

Suburban39%

Rural

$Low income 61%47% High income

% of consumers by demographic who are considering buying an electric vehicle

18-24years

58%

25-34years

60%

35-54years

52%

55+years

42%


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According to our 2015 research, whenit comes to EV home-based chargingsolutions from their energy provider,consumers responded with the followinglevel of interest:

42 percent in a home-based solution thatautomatically charges the EV during timesof the day when electricity is cheapest

39 percent in the installation of an EVhome-based charging station

26 percent in maintenance services for anEV home-based charging station

Some progressive energy providers arecollaborating with fellow energy providersor local governments to provide chargingstation products and services. For example,CLEVER is a leading provider of EV chargingstations in Denmark.51Owned by five largeDanish energy providers that together servicemore than 60 percent of the Danish market

(SEAS-NVE, SE, NRGi, EnergiMidt and EnergiFyn), CLEVER provides public and home-based charging solutions.

Consumers are beginning to realize thattheir EV batteries could be used to storeexcess solar generation during the day foruse at night. The Tesla Model S battery canreportedly already store enough energy topower the average US household for threeand a half days.52

EV manufacturers and energy providersare forming strategic alliances to develop acommon platform to communicate betweenEVs and the smart grid.53As consumersbegin to use the batteries in their EVs asa power source for their home, the energyprovider could expand its offerings tothese consumers to include home energymanagement solutions that help maximizethe charge and life of the battery.

Power on demandNew business models have emergedthat enable consumers to get serviceson demand. When you consider homeentertainment, the traditional approachof offering a standard cable package andoptional bundles has been overtaken byalternate forms of media consumption(e.g., YouTube, Apple T V, Netflix) whereconsumers choose what, when and howthey watch. On-demand consumptionof products and services, coupled withthe emergence of the sharing economy,are beginning to impact how consumersperceive and consume energy.

Consumer interest in energy independenceis significant, with 57 percent of consumersglobally saying they would considerinvesting in becoming power self-sufficient(see Figure 18).

Figure 18. More than half of consumers are looking for a short investment payback period for becoming power self-sufficient.


Would you consider investing in becoming power self-sufficientso you would not have to buy energy from your energy provider(e.g., by installing solar panels and storage)?

What would be the acceptable payback period (i.e., the time ittakes to recover your initial investment) for you to invest intechnologies to become power self-sufficient?

Less than five years

50%

57%

Yes Between five to 10 years

43%

Beyond 10 years

7%

Base: Interested in investing to become power self-sufficient.


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Interest is highest in the 18- to 34-year-old range, which may provide an earlyindication of a growing market fordistributed generation and storagetechnologies. However, the switch to self-sufficiency needs to make financial sensefor the consumer. Indeed, half of interestedconsumers would like a payback period offewer than five years, with more than 90

percent looking for a payback period of lessthan a decade.

As discussed in Accentures DigitallyEnabled Grid 2014 research, the feasibilityof achieving sustained power self-sufficiency is currently out of reachdue to the current maturity and cost ofenergy technologies. A large number ofconsumers have practical limitations onroof availability, such as building ownership,or lack the appropriate orientation ofroof space for solar PV. In addition, the

amount of storage capacity required to

be self-sufficient is prohibitively large.However, the evolutionary improvementsin technology efficiency and the associatedcost reductions may make energyindependence a viable option in the future.

Despite consumers interest in increasingenergy independence, they also recognizethe need to remain connected to theirenergy provider to address what Accenturecalls outage anxiety. Consumers expectthat their relationship with their energyprovider would be focused on back-uppower services. Of the 57 percent ofconsumers willing to consider investing tobecome power self-sufficient, 89 percentwould look to mitigate the risk of havingto go without power (see Figure 19). Bydeveloping products and services that meetprosumers specific needs, energy providerscan reposition themselves as the go-tosource for reliable energy support.

Building digital valueDigitally enabled consumers have a higherinterest and likelihood to be first movers,and acquiring their share of spend ispivotal. In competitive markets, digitallyenabled consumers are likely to becomethe battleground in the hunt for value andadditional revenue. In regulated markets,these consumers offer prime opportunitiesto engage around energy management.As consumer interest and propensity topurchase energy-related products andservices grow, energy providers have theopportunity to realize new value. Leadingenergy providers are already architectingfor the future and considering the cultural,business and technology impacts of newproducts and services.

Figure 19. Consumers are interested in back-up power services from their utility/energy provider to minimize the risk of havingto go without energy.


57%

Yes

Would you consider investing in becoming power self-sufficientso you would not have to buy energy from your energy provider(e.g., by installing solar panels and storage)?

If you were to install technologies to become powerself-sufficient, would you be interested in back-up powerservices that may be offered by your energy provider tominimize the risk of running out of power?

89%Yes

Base: All respondents who would consider investing in becoming power self-sufficient.


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36 The digital energy platform (r)evolution

While product and service opportunities abound, the future

will not be about a single product, process, service orsolution. Rather, it will be shaped through digital industryplatforms and ecosystems that fuel breakthrough innovationand disruptive growth.

The digital energyplatform (r)evolution


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While many businesses are using digitalinitiatives to harness social, mobile,analytics and cloud technologies, forward-looking leaders are offering consumersmore by unifying such initiatives under aplatform. The 2015 Accenture TechnologyVision identifies the platform (r)evolutionas one of five key trends fueling the nextgeneration of breakthrough innovation and

disruptive growth. Already, platform-basedcompanies are capturing more of the digitaleconomys opportunities for strong growthand profitability. In fact, according to theMassachusetts Institute of Technology,In 2013, 14 of the top 30 global brandsby market capitalization were platform-oriented companiescompanies thatcreated and now dominate arenas in whichbuyers, sellers and a variety of third partiesare connected in real time.54

For companies across sectors, it is no

longer enough to simply develop andlaunch digital tools and products with theexpectation that consumers will adoptthem. Rather, companies need to applytheir industry knowledge to build flexibleplatforms that enable rapid innovationincluding development and deployment ofthe products and services needed to drivetheir digital business strategies. Such afoundation supports more effective ways ofoperating and creates opportunities for newrevenue streams and customer satisfaction.

Digital platforms enable developersto build applications that facilitatecollaboration, workflow and valueacross industries and geographies moreseamlessly and more quickly than everbefore. In fact, 81 percent of industryexecutives surveyed as part of The 2015Accenture Technology Visionbelievethat in the future, industry boundarieswill dramatically blur as platformsreshape industries into interconnectedecosystems. In short, platform-basedecosystems represent new competitive

arenas for meeting consumer demands.

While digital industry platforms haveunleashed tremendous value and disruptionin other industries, Accenture believes thatwhen it comes to gas, electricity and water,the industry is poised on the brink of aplatform (r)evolution.

For energy providers, the imperative isnot determining how to fit digital into anestablished ecosystemits recognizingthat companies in nearly every industry arealready beginning the process of creatingthese new digital ecosystems. Bringing theseecosystems to life in the utilities industrywill require thoughtful consideration.

Shift in mindset fromme to weAs enterprises move to platform-basedmodels, their technology capabilitiesare rapidly changingand so are their

ambitions. Innovative companies areembracing platforms as a way to increasetheir capabilities so they can attack largeropportunities, solve bigger problems andserve their customers better. Innovatorsknow they cannot do all of that alone. Theyrealize that their fortunes depend not onlyon their own successful efforts (me), butalso on the success of all players in theirplatform-driven ecosystems (we).

Whether players include competitors,vendors, employees, consumers or all of

the above, digital platforms are creatinga level playing field and facilitatingcompetition as well as coordination.As one example, Chinas smart cityplatform approach is enabling Siemensand major providers such as SchneiderElectric to take an integrated, scalableand repeatable approach to addressingcomplex urban transportation, buildingand energy management challenges.55

Digital technologies by their very naturerequire rapid, modular, agile, flexiblecapabilities. The best digital solutionstake the power of information technologyand put it in the hands of the broaderecosystemand this ecosystem includesmanagement, front-line users, endcustomers, partners and developers. Thefundamental shift in mindset from me

to we means that utilities and energyproviders must embrace a mantra ofnot building it themselves, but insteadleveraging what is available through thebroader ecosystem to address their businessrequirements (see sidebar: Nest Threadweaves together connected home webon page 38). The power of collaborationcontinues to be a fundamental current ofchange in the industry.56Energy providersneed to build a core competence inpartnering with a variety of players withinthe digital energy ecosystem.


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38 The digital energy platform (r)evolution

Ecosystem as aninnovation sandboxAdmittedly, it may not be easy for large,established companies to innovaterapidly. Increasingly, leading companieshave begun to drive innovation in anunusual way: allowing others to innovatefor them. By opening their platforms

to external companies, organizationscan further expand such effortswithplatforms serving as an innovationsandbox in which alliance partners,startups and even consumers cansafely and creatively experiment.

With digital, businesses can more easilyfind fresh talent to solve new and complexchallenges. Consider Kaggle57the largestcommunity forum for data scientistsworldwide. Participants compete to solveanalytical problems, and a quick search ofenergy-related contests shows topics suchas load forecasting, solar or wind energyforecasting, and energy disaggregation.

Those who offer a successful solutionmay be invited to consult on interestingprojects for some of the worlds largestcompanies. Businesses are not

accenture new energy consumer final

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