Billing strategies for competitive energy retailers

Quindi Research

By Catherine Viola
April 2014

(Below is the executive summary to this analyst report from Quindi Research. This analyst report studies new billing strategies for energy retailers in competitive markets and prominently features LogNet Systems and our MaxBill solution. To download this analyst report, please click here.)

In competitive markets, the energy retail environment is undergoing a radical transformation, driven by new technologies, changing consumer attitudes, and the innovative approaches brought in by some of the newer suppliers.

Smart metering – In the distribution grid, advanced metering infrastructure is starting to be rolled out in many parts of the world. One of the benefits is accurate consumption data and an end to estimated bills for consumers, while consumption analytics give insights into how energy is being used and provide a basis for a new two-way dialogue with the customer.

Smart homes – In the home, microgeneration installations such as solar panels mean that households are no longer just passive recipients and consumers of energy, but can actively contribute towards their energy needs. Eventually, microgeneration sources could be integrated with other smart devices in the home, including smart thermostats and space/water heating systems, kitchen appliances, air-conditioning, swimming pool heating, home security systems and electric vehicles, as part of a future smart home in which everything that is useful and meaningful to be connected is connected.

Changing customer expectations – Not only do customers want to pay a fair price for their fuel, but they also expect their energy supplier to offer the same high levels of customer service that they enjoy from big retail brands or their mobile service providers.

Diversification of services and suppliers – traditional utilities compete with players from many different backgrounds – big consumer retail brands, companies investing in renewable energy generation, telecoms service providers, solar panel providers, home services or energy efficiency companies, and home security solutions providers. Some of these companies are bringing new types of service in which electricity and gas supply is just
one element of a broader proposition – for example, bundles combining energy with broadband or mobile, or services that package energy supply with home energy efficiency products. The permutations are very diverse, but many embrace the idea of using non-commodity and value-added services to
create highly differentiated propositions that are designed to increase customer stickiness and establish longer-term customer relationships.

These shifts are placing new demands on the billing and customer care/customer information systems used by energy retailers, and challenging the traditional utility suppliers to upgrade their solutions. At the same time, there are opportunities for new vendors with modern, flexible solutions to challenge for market share.

This report examines the strategies of some of the most dynamic new entrant suppliers and asks which solutions vendors are best placed to thrive in this new environment. On the one hand, there are the traditional utility solutions vendors, who have the advantage of extensive sector knowledge and experience, but whose retail solutions were not designed for some of the emerging requirements, such as real-time processing or line-of-business diversification. Theirs is largely a product development challenge, to introduce timely upgrades in line with their customers’ requirements for new functionalities.

On the other hand, there are newcomers to the utility sector who bring field-proven solutions that have been designed to enable complex service packages and adapt rapidly to changing service requirements, but whose experience of working with utilities is more limited. Their challenges are to prove that they have a sufficient understanding of the utility sector and to demonstrate their solutions in action.

As new types of service proposition and service provider emerge to challenge the classic utility model, there will be an increasing demand for modern, flexible billing and customer care solutions that can accommodate widely varying combinations of products and services. We believe this will allow the emerging challengers to the traditional utility solutions vendors to gain a foothold in this sector and reshape the vendor landscape.

To download this analyst report, please click here.