Energy Retailers Are Facing a New Normal in which Household Customers Play a Bigger Role
The coronavirus outbreak has led to changes in our daily lives, which in turn have had a major impact on energy consumption in Germany. While total energy consumption has decreased due to the lockdown, household electricity consumption has increased significantly. Across Europe, utilities are seeing that household demand patterns on weekdays tend to be typical weekend days—the demand is higher and the profile is flatter. Since March 15, 2020, average energy consumption during office hours for households in Germany has risen by 8% and the afternoon peak increased by 15%.
It is expected that the number of people working from home will remain permanently higher, even if the economy recovers quickly after the pandemic. This is likely to result in a permanent adjustment of the load curve of households. This change may have an impact on traditional business models of energy retailers—but it also offers new opportunities.
Load Curve of Private Households and Typical Feed-In Curve of Photovoltaic Systems in Spring in Germany
(Source: Tagesspiegel/Fresh Energy, Guidehouse)
The New Consumers Who Work from Home Are Aware of Their Energy Consumption and the Corresponding Additional Costs
Private energy costs are being scrutinized due to the increasing power consumption during the lockdown. The desire to reduce costs leads to more active customers who want to monitor and manage their energy consumption or even generate their own electricity. In addition, people with higher incomes have moved into the home office, the group that tends to invest more in energy-efficient, innovative, and renewable technologies.
Utilities can benefit from increased customer awareness by focusing more on the new customer needs and expanding their relationships beyond the provision of energy, for example, by offering sustainable heating and cooling systems or a better living experience through digital home and energy-saving products.
PV systems are also becoming more interesting, as the additional consumption at lunchtime in the case shown (see figure above) leads to an increase in self-consumption by about 10%, reducing the average investment payback for customers. This will encourage the growing segment of (climate-conscious) millennials and homeowners already active in the energy transition to invest in self-generation. In general, customers who stay at home are also more active online. Energy retailers should be well positioned to benefit from this growing sales market.
How to Succeed as a Customer-Centric Retailer
Although the new normal is a great opportunity to pursue a bigger role with residential customers, many retailers have failed to diversify their offerings and engage with customers in the past. An effective customer engagement strategy is essential, here are some of the key lessons learned:
After the first wave of COVID-19, a new normal is gradually emerging, to which utilities should quickly adapt in order to take advantage of opportunities that arise. If this happens too slowly or not at all, the established companies will have to expect the increased migration of their customers. Classic but agile competitors as well as new entrants—from technically savvy start-ups to the big oil and gas companies—are already kicking-off.