German energy retailers: The residential energy analytics challenge
In Germany, the government aims at increasing renewables shares, eliminating coal and nuclear dependency, which leaves electricity as the obvious winner in the energy mix. At the same time, more and more consumers are turning to prosumers producing their own energy and are willing to do their part in reducing CO2 emissions.
New entrants in the German energy market like Octopus and Tibber are anticipating this trend, offering a challenging and appealing alternative. They deliver renewable energy and their profit margins are based not on the amount of energy that consumers use, but on the smart services they provide to them. Their services are mostly subscription-based.
Germany’s incumbent utilities are E.ON, Vattenfall, and EnBW. On a municipal level and unlike most countries in Europe, regional energy providers still exist, the so-called Stadtwerke. The Stadtwerke enjoy a great deal of trust and popularity from their local customer base.
Smart meters have not been rolled out in volume in the country. For the time being, smart meters have been reserved for customers consuming more than 6,000 kWh annually. Given that average consumption is much less, most consumers only get digital meters without the capability to read out meter readings remotely. In addition to that, meters are often installed in the basement outside of WiFi reach and power supply. It is therefore virtually impossible to get access to meter data, which is a shame because most new energy services are depending on this meter data. For example, a user-friendly budget coach that is common practice in bank apps is not available for energy because of it.
In addition, data privacy is a sensitive issue, and rightfully so. To win the trust of customers it is important to enforce regulations and protocols. These measures however are in place. Energy providers play an important role in reassuring their customers that for any new services that require data processing, the data is safe and within their own control. By doing so, they are in an excellent position to provide the new type of personalized services in the energy domain that customers have become used to in other areas of their lives.
At the same time, German energy retailers are trying to keep up with digitalization and with meeting sky-high customer expectations for personalized services and control over their consumption. Although investing in green technology and home energy management solutions is the “next big thing”, it would cost 10 times more for an energy provider to develop such a competitive solution in-house instead of outsourcing it.
Despite the above challenges, back in 2017, E.ON wanted to be the first to offer its customers value-added energy insight services including real-time disaggregation based on digital meters.
E.ON developed the E.ON Smart Control app and NET2GRID was the energy reader hardware, energy insights platform, and NILM (Non-Intrusive Load Monitoring) supplier of solution. The E.ON Smart Control service was launched in Germany in 2019 to E.ON customers with a digital meter (MeDa) and has generated a high level of customer satisfaction to date, resulting in significantly improved customer loyalty. In October 2020, surveyed Smart Control users declared an impressive 60 Net Promoter Score (NPS), way above the industry average.
E.ON Smart Control is a service with which customers can view and control their electricity consumption in detail. The associated mobile app and the web app make consumption transparent, giving them the opportunity to identify energy guzzlers, compare appliances, and gain an overview of the breakdown of costs.
E.ON is capable of delivering this service to all types of meters addressing and resolving the issues of obtaining access to meter data while securing data privacy.
Energy providers looking to incorporate residential energy analytics services in their offerings could benefit from learning more about how E.ON managed to overcome challenges and turn the Smart Control app into a real customer engagement and loyalty booster.