The report comes from PwC (“2017 Power and Utilities Industry Trends“) and it looks at how the electric power and utilities sector is continually pulled to economize and pushed to innovate. The level of disruption has increased through the rise of the smart home and new expectations from consumers.
Smart home market is growing
Growth of smart home technology has accelerated over the past year. In 2016, 72 percent of consumers polled in an earlier PwC study indicated they were unlikely to introduce smart-home technology before 2020. The respondents were also less inclined to pay for smart technology for the home.
The reason for the shift in consumer attitudes is part down to the launch and marketing of Amazon’s Alexa and Google Home. Both have been influential on consumer attitudes. PwC’s analysis has found that 81 percent of people who have adopted smart heating devices see clear benefits. There remains, however, a large section of consumers who do not want to splash out for IoT devices. The challenge is for energy companies to convince them.
Energy providers need to adapt
These drivers mean that energy providers need to adapt to the smart home concept and bring out services that either work in tandem with technology providers like Amazon, or bring out technologies of their own. There are risks with this, given the intense competition between energy providers. This is summed up in a Bain briefing, noting that each energy company needs to come up with “a new and differentiated offering, convincing customers to try it and keeping them engaged long enough to recoup the initial investment and generate a profit.”
One example is Flow, a U.K. based challenger energy company that has steadily grown to establish some 250,000 customer accounts. The company also manufacturers and fits smart boilers which are able to adapt heating according to pre-set environmental tolerances or be adjusted remotely, in real-time, by consumers. Another innovation is from British Gas which has developed a smart thermostat that allows the consumer to remotely control their home’s temperature via a tablet. This is a direct challenge product to Google’s Nest.
Subsidize or not?
Not all energy suppliers have adopted such technology. However, failure to do so could start to cost market share. According to business analyst Susan Furnell, founder of Furnell Consult, the challenges facing utilities who have yet to adopt smart technology is how they account for the cost of a smart device. She notes: “most consumers do not want to buy this stuff – it is expensive”, adding that if a utility company wants wide-scale adoption it needs to look at ways to subsidize this cost.
