What does a customer-led energy transition mean for Australian energy?

Six strategic imperatives can help energy providers meet the changing demands of Australian customers. 

In brief

• Australia’s energy market is being reshaped by the energy transition and regulatory changes that will open the market to new, digital-first competitors.
• EY surveyed 2,000 Australian energy customers to better understand their changing expectations and how providers can meet them.
• A focus on six strategic imperatives can help providers build a people-centred, technology-empowered approach that gives them a competitive edge. 

Disruption may be an overused term but it’s the only way to describe the current state of Australia’s energy market. The country’s energy retailers, distributors and generators (we’ll call them all “providers”, to keep things simple) are being buffeted by the forces behind the energy transition –decarbonisation; decentralisation and digitisation – that are altering how they operate and, crucially, how they engage with customers. And now the upcoming expansion of the Consumer Data Right (CDR) into energy looks set to open the sector to a raft of new, digital-first, agile competitors.

For incumbent energy providers, waiting to see what happens next is not an option – the time to act is now. EY surveyed 34,000 energy customers across 17 countries, including 2,000 in Australia, to identify what people want from providers, how satisfied they are with current services and where opportunities to differentiate may lie. The results, and EY Teams’ research, indicate that a people-centred, technology-powered approach to transforming the customer experience can help Australian energy providers compete in a changing landscape. A focus on six strategic imperatives can prioritise efforts. 

About the survey

This global consumer survey was conducted across 17 countries with a diverse demographic sampling of 34,000 residential energy consumers aged 18 or older. The Australian survey included 2,000 consumers. To bring a broad consumer perspective, the survey sample included a mix of bill payers and non-bill payers across ages and income levels.

1. Effortless engagement

We’ve all become used to personalised, intuitive services in entertainment, food, transport, retail and beyond, easily accessed when and where we want them. So, it’s not surprising that customers now expect effortless experiences in energy too. Apart from affordability (which remains, by far, their number one priority), customers tell us they want convenient (34%), controllable (35%) and personalised (61%) energy solutions.

And demand for an effortless experience is set to increase as a new type of energy customer emerges. We’re seeing the rise of the omnisumer – someone who uses, produces, stores, buys and sells energy in different places with a range of different providers. For example, a person with solar panels on their roof, who drives their EV to work, charges it there and then uses their smart home app to turn on the air conditioning before they set off for home again. 

Omnisumers’ expectations for simple, yet sophisticated experiences that make their life easy will soon become the new benchmark for energy customers. And, as CDR changes come into play, competition for their business will be ruthless. Digitally-enabled energy platforms, such as the UK’s Octopus Energy, have built their business on a promise of making life as easy for customers as possible, using the latest technology to do so.

For incumbent providers, the best way to compete is to get the basics right first. Focus on creating effortless experiences in those key moments that matter – sign up, activating a new service, moving home, first bill and emergencies or outages.  Use data insights and metrics to confirm these moments and then work on improving processes and systems to make interactions easy. 

2. Operational agility

Agility is critical to successful transformation but almost all providers (94%) say that the speed at which their organisation can move is a challenge. Without it, organisations will struggle to keep up with changing customer expectations – 78% of customers told us they want responsive energy providers.

For many providers, existing “command and control” operating models are a drag on agility and productivity. It may be time to consider the flatter, democratised models adopted by digital disrupters that reduce the cost to serve and allow autonomous teams to quickly develop innovative new offerings. For example, some companies empower multi-skilled teams to “own” a particular customer segment, collaborating with other teams to share solutions and, ultimately, drive deeper customer engagement.

Providers should also consider whether current operating models allow them to play their role in what we expect to be a dynamic future energy ecosystem. The ability to form partnerships with start-ups, device and appliance manufacturers and financial services organisations will give providers the capacity to fast-track innovation and create competitive differentiation. 

3. Digital enablement

Energy customers now prefer digital for 8 out of 10 interactions. And forget about the “digital divide” – 63% of Boomers report using digital channels compared to 59% of Gen Z.

But 58% of Australian customers said they had experienced a problem using their energy provider’s digital services. Thirty-five percent were not confident using them – a figure which jumped to 45% for Gen Z. This should act as an urgent call to arms for providers yet to optimise their digital capabilities. Customers demand better digital experiences, and CDR will soon open the industry to new competitors prepared to give them what they want.

But customers don’t want self-serve for everything. For interactions including making a complaint, managing an outage/emergency, or resolving an issue, people prefer the human touch. For providers, giving people what they want, starts with knowing the customer and their context. This can guide the design of a simple, seamless customer journey and support employees and/or business partners to deliver this in the field or call centre. Regular updates of the digital strategy and roadmap can keep it aligned to changing customer behaviour and developing technology. The ability to orchestrate personalised experiences as customer behaviour changes and ecosystems expand can be enabled by open cloud-first architectures that provide strategic and secure, but flexible, foundation for growth. 

4. Adaptive workforce

COVID-19 accelerated utilities’ plans to build an adaptive workforce. Many providers found remote working improved productivity and created a more positive employee experience proven to boost customer satisfaction. It also allowed utilities to tap into the gig economy, accessing scarce skills when border closures made it tough to find talent. 

As providers return to physical workspaces, they have a once-in-a-generation opportunity to reinvent work with humans at the centre, to capitalise on productivity gains and attract top talent. For many, a successful hybrid working model will require first upgrading operational capabilities to allow, for example, dynamic scheduling, real-time support and online training.

5. Innovative growth

In good news for providers, our research found that 48% of Australian customers would turn to energy providers first when buying new energy solutions. More than a quarter (28%) are considering purchasing solar in the next three years; 21% are considering energy monitoring systems; 18% say they might buy an EV.

Providers have an opportunity to double down on this position as supplier of choice before CDR changes open the market to trusted brands from other sectors and fintech-like disrupters. For example, there may be opportunities to help business customers electrify commercial fleets, capitalising on federal government incentives outlined in its Future Fuels and Vehicles Strategy. 

We’re urging providers to switch their perspective on CDR beyond compliance, considering instead how to take a proactive role, sharing data and collaborating with partners to chart new paths to growth. A strategic product roadmap can help providers stay focused and identify where building or partnering makes most sense. 

6. Sustainable enterprise

Nearly two-thirds (64%) of Australian consumers say sustainability is important when considering an energy provider. One-third – and nearly half of Millennials – are willing to pay more for sustainable products and services. However, only 58% of customers are satisfied with the sustainable products and services currently offered by their energy provider. 

This creates an opportunity for providers to improve their sustainable offerings, with the understanding that customer decision-making is driven by diverse values. Environmental impact is important, but so too is convenience, control and, as mentioned in our effortless engagement section, cost trumps everything.

Energy providers can also play a key role in helping business customers achieve their green ambitions. There are opportunities to help companies better manage their energy, upgrade equipment, electrify fleets and procure their own renewable energy, including through power purchase agreements (PPAs). Providers can support customers as they navigate Australia’s soaring, but complex, PPA market, and help improve transparency and reduce costs of reporting and reconciliation, which is emerging as a well-suited application of blockchain distributed ledger technology. 

Lighting the path

For energy providers grappling with the complexities of the energy transition, the challenge of meeting changing customer demands may seem like another burden to bear. But we believe that an organisation-wide focus on transforming the customer experience can create opportunities for growth. Customers are already leading the way to a new energy future – now energy providers can light the path.