Consulting

Data helps energy companies build better services

Data. There’s more and more of it every day. We’re more and more reliant on it every day. We’ve come to terms with the fact that data has all the answers, but we frequently struggle with finding the right questions to ask it.

Energy companies are no exception, but they are in a unique position.

As meters and other technology related to their business keeps developing, they are able to collect more and better data about their customers - consumers, producers and prosumers. Take meters alone - manual readings used to be performed once a year. Smart meters can provide readings 17,500 times a year and at a level of detail that was thought impossible until quite recently.

While all this technological development is taking place, energy companies are finding themselves deeper and deeper in the customer service business, where finding the right problems to solve is imperative. Energy companies know more about our behavior than anyone The data they collect has all the answers. We just need to find the right questions.

Learning to use data to deliver customer-centric services is often mistakenly seen as an IT issue. It’s not. It’s a cultural question. There are known ways to organize work that help organization gain a deeper understanding of their customers to create the services the customer wants - not the ones we think they want. Or want them to want.

Here are a few things energy companies can do a little better with the right data.

Better Services

The more we know about how people behave, the better our assumptions about what they need and want get. Data will never replace getting out of the proverbial building and actually spending time with your customers as one of the most vital phases of product and service development, but it can give us a better start and make the journey towards a service that fulfills a real need a lot shorter and less expensive.

Better customer segmentation

Customer segmentation has often been a challenge for utilities. With more detailed and accurate data, utilities can gain a better understanding of the different customer segments they serve and offer better services that fulfill their diverse needs. Moving from no of people in households or type of houses to segmenting to electricity consumption patterns.

Better rate design

Customer needs are evolving. Consumers are demanding more distributed energy options and emerging technologies are increasing their energy production capabilities. The way people consume energy is becoming more diverse. All this presents a challenge to the way rates are designed. Energy companies can use the data they have on their customers and other stakeholders to improve their rate design to make it more responsive and fair. Hourly-based pricing is growing in popularity, resulting in savings of up to 5-10%.

In electricity transfer, alternative models are emerging to replace old ones that are sometimes perceived as unfair. Some advocate a move to a model based on consumption spikes rather than an hourly rate, effectively charging customers for grid capacity rather than time.

Better support and rewards for increasing energy efficiency

More detailed data on customer load profiles and consumption patterns allows utilities to support their customers in finding the best ways to conserve energy. Companies can also use data to reward customers for increased energy efficiency via new pricing models, as above.

Better grids

Data can help utilities act to prevent the worst peaks by providing storage solutions and using rates as well as other incentives to nudge user behavior towards cutting consumption during peak hours. This eliminates the need to build grids for theoretical maximum loads. Data can also be used to eliminate the need to build reserve power plants, as residential electricity consumption can be aggregated to balance the peak.

Better predictive services for users

Utility provides information about individual appliances and alerts user if something is wrong. Or about to go wrong. If any appliances or, for example, floor heating consume more energy than usual, it will show up in the data. If there’s an energy spike at your summer house in the middle of the winter, someone may have broken into it through a window.

Better customers, less churn

Energy industry deregulation has created a situation where customers have limited choices. While consumers can’t choose their energy distributor, they can choose the supplier. Price is usually cited as the primary reason. Data helps energy companies identify the customers they must hold on to. According to a study by Accenture, utilities, for example, make 80% of their profits from 20% of their customers.

Text by Nadja Peltomäki, Lauri Anttila and Arttu Tolonen