Engaging customers with their energy consumption to “support a better world” and “change the world for the better” is not something you would typically associate with a telecom giant like Swisscom. tiko, a spinout of Swisscom Energy Solutions AG, has developed a ‘smart home heating control system’, providing a means for electricity demand response (DR) and load management via in-home electrical heating systems (electrical heating e.g. HPs, night storage and direct electrical). The system is designed to provide utilities, energy providers and network operators with a simple ‘on-off’ DR & load management solution, whilst providing customers with reduced heating costs. Connected heating devices are switched on or off as required, but it is ensured that durations are short enough that thermal comfort is not compromised.
What we thought back then…
When Delta-ee first covered this innovative business model as part of our Energy Services Innovation project, we saw the key threat they posed to traditional energy market players. This new entrant threatened to use demand response as a platform to interpose itself between energy suppliers and customers, from where it could sell other smart services. More specifically, by leveraging their existing telecom customer base, this business model was looking to explore new value streams and access the large DR & load management value pool by generating value through operation in the electricity balancing market. This initial foray by a telcom giant into the potential minefield represented by the energy market served to highlight what we at Delta-ee have been saying all along: the market is shifting from a commodity- to a services-orientated market, and this represents both a threat and an opportunity to incumbent players.
As part of our ongoing energy services innovation work, we’ve been keeping in contact with tiko, looking at how their business model has changed in light of their successes and challenges in the marketplace. At heart, the business model remains the same, although the customer offering has been re-positioned to focus on customer empowerment rather than purely on energy savings. Learning from their customers, they are now positioning themselves as a means of helping customers “support a better world”, providing customers with the feeling their participation in the energy system can “change the world for the better”. This shift in communication with customers seeks to capitalise on the current zeitgeist: providing customers with a means of “making a difference”, whilst also establishing an ongoing relationship for future upselling & cross-selling. Combining this re-positioning with success to-date in Switzerland, tiko is currently exploring opportunities in other markets i.e. making use of their momentum to expand into other markets through telco partners or licensing in target markets.
This business model continues to provide a low-cost, smart and customer-centric way to exploit demand flexibility from residential and SME customers, and is already monetising this on the Swiss balancing market. A telco giant’s backing with the heart of a start-up, the Swisscom spin-out is constantly learning from its customers and adapting its strategy to best suit current market conditions. This has allowed for swift, organic growth, and represents an interesting example of a non-energy player entering into and eating away at the traditional energy market value chain.
So what disruptive business models do you see transforming the energy sector? Where do they fit in? Shoot me an email, [email protected], and let me know, or join the discussion and get involved via our LinkedIn Group ‘Delta-ee Energy Services Innovation Group’.