Auto-switching: will energy customers relinquish control?
Auto-switching* is more than a concept – it’s emerging from Austria to America, Great Britain to Germany. From Look After My Bills’ appearance on the UK’s Dragons’ Den, to articles a-plenty appearing across the news, it’s slowly but surely entering the mind of the public. But while energy consumers are gradually becoming more aware of auto-switching, although by concept rather than name, it’s still being met with suspicion by some. How can customers be assured they will, in fact, be given the best deal? Is it really as easy as it sounds? Where’s the catch?
In the first episode of Talking New Energy, the new podcast from Delta-ee, we discussed the important issues driving auto-switching forward, and the roadblocks standing in its way. Find out more headlines below.
Embracing technology and the importance of data
MyWave, based in New Zealand, has developed artificial intelligence technology that can work on both sides of the fence. They’ve launched an auto-switching business in the UK, with their technology scouring the market for the best deal for particular customers. But they’re also deploying their technology with incumbent suppliers, helping them to deal with their customers more efficiently. Essentially they gather data about their customers through its My Intelligence Assistant’s various data points, such as a smart meter or customer’s latest energy bills, they can interact with the energy market on their behalf, present the customer with the best deals available to them, and allow them the choice to switch or not – perhaps with a company’s portfolio of tariffs, or from one company to another.
According to Geraldine McBride, MyWave’s Co-Founder, “energy companies are starting to adopt this technology because they can see the power of essentially intelligent personalisation, where you can build a relationship with your customer based around their data, give the customer a benefit based on their data, and use it to make sure they are on the right plan”.
The future of the energy system: adding complication but opening opportunities
Nigel Evans, Co-Founder of auto-switcher Flipper, suggests the combination of changes in the energy system such as “a far greater penetration of smart meters, the potential move to half-hourly settlement for residential customers in the UK market, and the facilitation of two-way interaction with customers (not necessarily just demanding and consuming energy but potentially storing it)” leads to a whole range of complications. As customers’ needs grow more complex, for example as they purchase an electric vehicle, we’re even starting to think about the potential for different energy suppliers to supply one customer.
Charmaine Coutinho of Delta-ee suggests, “it may well be that for this particular point in time, your electricity supplier should be somebody who’s got really highly specialised and appropriate electric vehicle tariff, but three hours later it might be someone who’s got a very targeted heat pump tariff or someone that offers you a very good export rate to the grid”. This opens up greater customer choice, but a huge amount of innovation in the energy sector.
So how can we convince the customer?
For many customers, it’s all about keeping it simple. They want to fill in their details and leave the auto-switcher to do its job, with no complications. Auto-switchers’ marketing teams will need to let customers know the other benefits they can expect, such as saving them time. In the case of MyWave, for example, social welfare beneficiaries entitled to energy discounts can access these via the technology. This saves customers a lengthy phone call to a call centre, taking this from a 40 minute to a 30 second process.
Furthermore, there needs to be a trust between the customer and the auto-switcher that they will be provided with the best deal. Nigel Evans explains, “simple price comparison wasn’t working effectively for customers. It was complicated, very few people had confidence that they were getting really good deals [and] they were getting locked into deals which perhaps they weren’t comfortable with.” Flipper decided to use a business model which charged customers a fee, rather than working on a commission basis, so they could be seen to be genuinely independent of suppliers.
So what does the future hold?
It looks as though the future of auto-switching and its success is about adding value beyond price saving alone, such as ease of use for customers, peace of mind that they’re on a good deal, and making the complex simple. The market for auto-switching is embryonic today, but will keep growing strongly. Energy companies are likely to fight back with personalised deals of their own. It will be a fascinating battle for the customer relationship.
*Auto-switching allows customers to depend on a third party to switch them to the best energy deals, as and when they arise. For further explanation, visit the Flipper website.