Could energy one day be given the Netflix or Spotify treatment? Could a commoditised, utility service be revolutionised in the eyes of consumers and become a ‘lifestyle service, enabled by clean energy and digitised smart meters?
Those are the intriguing questions posed by a new survey commissioned by the UK’s smart meter agency Smart Energy GB.
The poll of 1,500 adults was undertaken by Lightspeed Research with a view to assessing attitudes to so-called lifestyle service companies and the role the energy sector could play in an emerging sector currently dominated by broadband and TV packages and media streaming services.
It found half of those surveyed found the idea of buying energy as part of a lifestyle package appealing, rising to almost two thirds amongst millennials.
Interest was also high in purchasing energy from those sectors deemed most likely to try and package energy supply with their wider offering. For example, 49 per cent expressed interest in purchasing power alongside their broadband package and 48 per cent backed the idea of supermarkets offering energy alongside their online shopping. Nearly a fifth of respondents said they would be interested in buying energy from a music streaming service, such as Spotify.
Crucially, those who already had a smart meter were more likely to welcome the idea of energy as part of a lifestyle service. Fifty-eight per cent of those with smart meters liked the concept compared to 50 per cent of respondents overall.
The idea is not as far-fetched as it might sound. Tech giants such as Google, Microsoft, and others have invested heavily in both renewable generation capacity and smart home technologies in recent years, prompting speculation they could one day seek to add energy utility arms to their already wide-ranging business models. They also specialise in the kind of digital algorithms that underpin smart grid technologies and the time-of-use energy tariffs that are expected to tackle the peaks and troughs in power supply that will result from an increased use of renewable energy.
Meanwhile, the popularity of solar panels, smart meters, and electric vehicles are all serving to establish energy as a ‘lifestyle’ play amongst a growing band of environmentally minded consumers.
Advocates of the lifestyle service model argue it could help cut costs for energy suppliers and offer a range of accompanying marketing services to customers, such as discount vouchers.
Dr Jeff Hardy, senior research fellow for the Grantham Institute at Imperial College London, said that while significant barriers remained the emergence of energy service companies could open up a range of exciting possibilities.
“Lifestyle service companies could transform tomorrow’s energy markets, competing to deliver what their customers need,” he said. “Whether these are today’s energy companies or new entrants from other sectors will largely depend on who understands their customers best. Clearly there is an opportunity for consumer-focused energy companies to mobilise data and digitalisation to deliver services that are in tune with the way customers live their lives, although there are regulatory, market design and consumer protection issues that will need to be addressed along the way.”
Sacha Deshmukh, chief executive of Smart Energy GB, said the survey suggested there could be pent-up demand for a new approach to energy delivery.
“This research provides a hugely exciting glimpse, for businesses and consumers, into what a future with a fully digitised energy infrastructure will look like,” he said. “Not only will our home services become more streamlined, but a world of possibilities will open up when it comes to buying gas and electricity. That future isn’t as far away as you might think – the option to buy energy in a different way, from a different type of company, is a key benefit of smart meters. Not only that, but the enthusiasm of smart meter users for lifestyle service packages is further evidence that the smart meter rollout is an essential step on the path to a smarter world.”
There are plenty of barriers to the emergence of energy as a ‘lifestyle’ product, ranging from the still-considerable technical challenge of completing a national smart meter roll out to understandable customer reticence faced with a new delivery model.
But as the mega-deal proposed this week by E.ON and RWE demonstrates, the energy market is in flux as a direct result of the emergence of clean technologies. It seems unlikely that the tech giant’s interest in the sector will remain theoretical indefinitely.