Strategies to create market-leading customer benefits…

The adoption of distributed energy technologies by consumers is accelerating. Many households and businesses are installing technologies such as solar, storage, heat pumps, thermostats and EV chargers that enable them to take control of their energy and mobility. These developments can reduce energy bills and grid consumption, and consumers can also receive income for their electricity export and usage flexibility.

While this makes these technologies attractive, consumers often find themselves struggling to find the holistic support they want to meet all their needs. If providers want to help the market live up to its potential, this customer experience needs to evolve to match changing customer needs.

The adoption of distributed energy technologies by consumers is accelerating. Many households and businesses are installing technologies such as solar, storage, heat pumps, thermostats and EV chargers that enable them to take control of their energy and mobility. These developments can reduce energy bills and grid consumption, and consumers can also receive income for their electricity export and usage flexibility. While this makes these technologies attractive, consumers often find themselves struggling to find the holistic support they want to meet all their needs. If providers want to help the market live up to its potential, this customer experience needs to evolve to match changing customer needs.

As installations grow, users want integrated insight and control

As media coverage and positive experiences increase, confidence is growing and users are looking for providers who can support them through the whole process. However, the choices they have to make can be confusing. Local providers are often complemented by national energy and global technology companies, each offering a partial range of solutions but lacking an overall integrated approach. This uncoordinated approach is often seen when using individual mobile applications for separate distributed energy options, as installation providers rarely have a single application that allows users to take a holistic view of their technologies.

Early adopters may accept this experience, but to create a mass market, a better, simpler customer experience will be needed. For example, a household with a heat pump, solar and storage plus an electric vehicle will have at least seven different commercial relationships. While the technologies deliver real cost savings in combination, fragmented experiences frustrate consumers as they struggle to understand what reduced energy usage and cost savings can be achieved.

Providers of distributed energy solutions need new capabilities

There are a range of contributors to distributed energy provision from the hardware manufacturer, financing providers, the contracted installation company, their field teams and more recently, energy service providers. Energy service providers look set to become the commercial aggregator for consumers to install, integrate, optimise and support the technologies. This development is a direct response to the complexity we are seeing in today’s market. This role already exists for large businesses, and providers are seeing an emerging opportunity in the residential and small business sectors, including providing incentives to customers by delivering shared financial rewards.

To be successful in these new markets providers will require a diverse range of capabilities, drawn both from existing businesses, and potentially acquired from external sources.

Those aspiring to lead customer adoption are taking action

There are six broad trends emerging in the development of distributed energy:

The first is that distributed energy technology manufacturers are raising investment to support scaling up and continued growth. The race for investment is ongoing with companies such as Indra, Givenergy and Myenergi recently confirming strategic investment. This race will mature in the next couple of years as it becomes clear who the successful market leaders are.

The second trend is for existing companies, such as energy retailers, to add capabilities. Some retraining is also happening, such as that to help meter readers to become installers. But acquiring installation companies provides a rapid injection of new capability in a market where competition for skills is fierce.

A further trend is in the convergence of technology, as companies evolve from their original single focus into related areas. EV charging companies are adding solar export integration while solar and storage companies are adding EV charging integration. Heat pumps are integrating with solar to further reduce heating costs. We expect the next step will be vehicle-to-everything (V2X) technologies moving through trials towards commercialisation at scale, with vehicles being both charged and sending electricity back to premises.

The fourth trend is in application developers looking to create simplified user experience platforms. These providers are working with either proprietary interfaces or open APIs to integrate services across energy, mobility, payments and flexibility rewards. Application providers may focus on one area (such as energy usage understanding or EV management) then widen from there over time, with others looking to create a ‘one platform’ system.

At the same time, financial institutions are exploring how they can finance distributed energy and electric mobility. As technologies become proven and their operational life understood, these institutions are looking at solution financing and payments management services.

Finally, governments and their regulators are working in the background to add standards (such as BSI1878 & 79) and interoperability. This creates a tension for innovators as they try to meet later government mandated standards and regulatory models. However, standard interfaces and data structures are bringing accelerated interoperability and supporting continued innovation and diverse competitive approaches.

As developments in technology and services accelerate, potential winners move ahead

Similar trends to other technology growth sectors are being seen in distributed energy. These are investments for scale, capability acquisition, user experience integration, early stage exits and emerging standardisation. The commercial opportunity in distributed energy is scaling quickly and will reach deployment maturity soon.

While energy prices may stabilise after recent market shocks, consumers now understand that without energy sources of their own, they are dependent on energy wholesale prices and cannot rely on continued government interventions. The next generation will face the combined demands of living sustainably and energy affordability and will need an understanding of the benefits technology can bring.

All this means now is the time to secure a future leadership position, set out a path to deliver ahead of the competition. As investments are made, pace setters may fall-away and be overtaken by winners who manage to secure customers at scale.

Part of the Smart Energy Race series