With rising customer expectations, stronger competition in energy retail markets and a shift from commodity to energy services, residential customer engagement becomes an important component of success for energy suppliers. They are looking to energy insights services as a critical tool for customer engagement and to unlock opportunity for new energy services. Delta-EE’s energy insights database helps energy companies better understand the evolving landscape of retail market competitiveness, smart meter rollout, residential customer numbers and churn and energy insight app usage across European countries and retailers.
All the data used in this article come from the energy insights customer engagement database.
The competition in the energy retail market is higher than before
Building a competitive electricity market which is open to new participants is an important element of Europe’s future energy vision. In 2019, there were already 11 countries with more than 50 national energy suppliers. Increasingly it is not just numbers of suppliers but market share which indicates the market competition. For example, in Sweden, Norway and United Kingdom, the market share of 3 main electricity suppliers is less than 50%.
The high degree of openness and competitiveness has made retaining customers a challenge for energy suppliers with the switching rate in European countries climbing year by year, with a knock-on impact on individual suppliers’ customer churn rates. In 2019, annual supplier switching rates were 19% in Netherlands and United Kingdom, up from 12% and 13% respectively two years before.
The increasing competitiveness in most European energy retail markets is forcing retailers to differentiate themselves and search for new approaches to increase customer loyalty. Energy insights as an important tool for customer engagement has gained more and more attention in recent years.
Smart meter rollout enables new customer services
The advances in technology, particularly smart meter rollouts, are providing opportunities to develop services to transform customer relationships. Smart electricity meters provide more accurate and frequent data readings, enabling more detailed energy consumption insights.
In around 10 European countries, the smart meter deployments have either completed or are more than 50% rolled out. In some countries where the market competitiveness is high, the smart meter rollout is still in progress. For example, in the Netherlands, the rollout has progressed from 60% to 72% during 2018 and 2019. In the United Kingdom, the rollout had reached 37% by the end of 2019.
In some Nordic countries and Italy, the first generation of smart meter rollout completed some years ago. Now a second, more sophisticated generation of meters is planned or underway, which offers increased opportunity for customer engagement.
Energy insights is becoming a must have service for retailers
During the digital transformation, energy retailers need to reduce their cost to serve customers to preserve margins. An effective way is by encouraging residential customers to self-serve.
By 2020, more than 70% of the retailers in Europe allow customers to track their energy consumption from a mobile app. Some challenger brands such as Oxxio in the Netherlands enjoy much higher app user penetration than incumbent brands. Some leading incumbents (EDF, British gas, Eneco, etc.) are responding with services, while the monthly active user rate for many retailers is still less than 5%.
There are retailers who have launched different services with different levels of energy insights. For example, EDP provides its sophisticated ‘Re:dy’ service in addition to its main customer app ‘edponline’. ‘Re:dy’ bundles solar PV and battery storage with energy insights. Consequently, the main customer app has a larger user base (137k monthly active users in 2020), while ‘Re:dy’ has much higher customer engagement in terms of frequency of use and time spent by users.
Energy insights sits at the heart of energy retailers’ customer engagement and digital transformation strategies. The major retailers are still developing greater functionality in their energy insights products to meet the growing needs of customers. In the face of rapid transformation in the market and changing consumer demand, energy insights is a battle in which energy retailers cannot lag behind in order to maintain competitiveness. For more information, please get in touch.