Consumers, the Focus Is on You
Who are the end consumers when it comes to energy? Their role and behavior are changing compared to the past. In a recent article, along with SDA Bocconi School of Management's Andrea Biancardi, "A New Paradigm in the Electricity Sector: Key trends and stock performance of European utilities," published in the European Energy and Climate Journal, we mapped and analyzed the six main drivers that are leading the transition to a more efficient and sustainable energy system. The first, perhaps the best known, is the decarbonization of the energy sector. The second is that of decentralization, i.e. the progressive growth in the number of small-scale electricity production plants, typically based on green technologies. The third driver is represented by digitalization, a trend common to most sectors. And the fourth is that of electrification, which is perhaps the most visible even to the layman: our energy consumption is increasingly becoming electricity consumption. The fifth, fundamental for promoting an acceleration of the rate of innovation in the energy industry, is that of industrial convergence. This highlights how a growing number of subjects from other industries (Google, Apple, Tesla, Shell, VW, etc.) are rapidly "converging" towards the electricity sector thanks to new business opportunities that are emerging.
But there is a sixth and final driver, which is defined as the activation of the final energy consumer. In this case, we are referring to the radical change in the behavior and role of consumers, mainly as a result of the recent evolution in a few key factors: these include technological innovation (e.g. smart meters), more effective regulation of incentives (e.g. dynamic fees), market information that is easier to access (e.g. supplier apps and offer comparison sites), and a greater awareness of the environmental impact caused by energy production and consumption. Specifically, not very proactive or passive historically (e.g. with a very inelastic demand, to use an economics term), energy consumers are now gradually beginning to take action and interact with energy supply companies, but also with the market itself.
Regarding changes in behavior, consumers are choosing different suppliers more frequently than has historically occurred, as far as the extreme case of autoswitching apps that automatically switch to a new energy supplier based on the market price. They can also request more advanced and innovative services: from the "simple" supply of certified green energy, to the "smart" management of electrical appliances in the home and charging services for electric cars. But they can also demand greater transparency on the sustainability of a supplier's supply chain.
Regarding changes in role, consumers can install solar panels and batteries in their home, effectively becoming self-producers in addition to consumers (known as "prosumers"). They can also become competitors of the suppliers themselves, participating in the electricity market, either directly through platforms based on blockchain, or indirectly through aggregators, which virtually combine different micro-producers and manage them like a single production plant.
For energy supplier companies, this driver implies a radical change in technologies and business models. In fact, it is no longer enough to offer a competitive price of the commodity to the end customer because the latter will gradually request more innovative, "green" and value-added services: "If I can meet my energy needs by myself, what do I need a supplier for?" This will inevitably occur after a decoupling between turnover and volumes of electricity sold and an improvement in the sustainability indicators of all company activities.