When it comes to the energy sector, or industry in general, government and innovation are two words not often associated with one another in Europe. Regulations, security and a business as usual approach are what springs to the mind when thinking of departments of energy the world over. However, it appears that this is beginning to change, with innovation starting to rise up some governments’ check-lists.
The West’s energy industry is coming under pressure to change and innovate at an increasingly frantic pace on account of a whole range of drivers that interact with each other in complex, unpredictable ways. Policy change, IT & technological developments, growing customer power, vertical market convergence and geopolitical factors are all playing a part. Energy companies know they have to react but, caught in the headlights of oncoming crisis, are freezing when decisive action is most needed.
However, we at Delta-ee believe that all is not lost; indeed, we believe that utilities will still have a critical role to play in the 21st Century. That is, provided they reinvent themselves now as credible energy services businesses and learn to depend less on their legacy, commodity-only business models. As part of our recent Energy Services Innovation study, Delta-ee investigated 107 global innovating energy service companies and identified 11 disruptive business models that can keep energy companies relevant in the 21st Century. We look to explore 4 of these in more detail in our upcoming Utility Week article.
Fighting their way through flight delaying mists, the captains of European utilities congregated last week at European Utility Week in Vienna. In search of answers and Wiener Melange, the fog overshadowing their understanding of their customers was clearly much harder to address than a mere touch of fickle weather. It was to this end, shining a guiding light for utilities to follow towards the customer, that Delta-ee ventured down to the ancient Austrian capital to publicly unveil our answer: #energyservicesinnovation
Our new Energy Services Innovation (ESI) Study
With the delicate scent of Lebkuchen (gingerbread) in the air Delta-ee’s Heat Pump Research Service braved the orderly streets of Nuremberg to attend the biennial European Heat Pump Summit. In search of views and thoughts from those in the thick of things as to what the future holds for heat pumps in Europe, we found that most eyes were on heat pump technology and performance rather than how to explicitly increase uptake across Europe.
Two traditionally separate markets are starting to collide. Coupled with the start of a connectivity revolution, this is opening up numerous innovation opportunities – which we think will start to disrupt both markets.
New market entrants threaten to disintermediate the utility/customer relationship
Which of the many stories of emerging innovation in the energy services world give us a true glimpse of how it will look in future?
The energy services world is changing as never before.
There are many reasons why.
There are challenging new objectives for carbon reduction, security of supply and fuel poverty.
Can the 21st century’s energy ‘trilemma’ really be solved by energy systems that were designed for the 20th century?
New technology is responding to the challenge.
In many markets today, PV opens up opportunities for new business models and new value creation. In the future, it will be joined by other candidates such as storage, distributed generation, and electric vehicles.
A wave of new entrant suppliers are entering the market with innovative business models and propositions, stealing market share.
Vertical markets are colliding.
Telcos are already eating into the energy market in the US, and are starting to do so in Europe. And appliance manufacturers have their eyes on part of the energy value chain.
The rise of connectivity and the Internet of Things opens up huge opportunities.
It also enables third parties to disintermediate utilities from customers, potentially reducing them to wholesalers operating on wafer thin margins.
There are so many new opportunities that, at Delta-ee, we have set ourselves the goal of identifying the most exciting stories of how innovation will change the energy services landscape.
And we’re not just focusing on ‘ideas’ – but looking instead for the early commercial offerings, trials and demonstrations that provide clear glimpses of the future.
Yes it’s about technology, but it’s also about a whole lot more. Consider the novel micro-CHP solution supplied by Flow Energy.
It’s an interesting piece of domestic technology: but what’s really appealing is their effective reinvention of themselves as an energy company; and their imaginative “pay just for installation” offering to customers. By taking energy companies out of the picture, Flow are able to access new value pools far outside those normally associated with boilers and micro-CHP.
Will this kind of novel thinking become the new normal in what has traditionally been a slow-moving industry?
This is just the start.
Delta-ee’s new Energy Services Innovation database will capture the most exciting value creation opportunities emerging from: