Utility Week

UTILITY WEEK | 10TH - 16TH JANUARY 2020 | 17 Policy & Regulation been mutualised, the pressure on cash flow has redoubled. Suppliers have to reconcile efforts to improve efficiency and margins with undue risks to service, loyalty and trust. Digitalisation, offshoring and collec- tions are all opportunities to become more efficient but they also pose risks to consum- ers and in particular the most vulnerable. Scalability As the shape of the market changes, the ability of challenger brands to serve larger and more disparate customer bases will be tested. In our own work, we've seen the volume of complaints we receive from out- side the big six outstripped by complaints concerning small and medium suppliers. Sustainable growth will depend on chal- lenger brands being able to deliver on price and service at scale and 2020 should prove who's up to it. Mergers, acquisitions, platforms and culture Scalability can bring the associated chal- lenges of integration. There are several large-scale integration projects ahead in the retail market and these always bring significant risk. Throughout our 14 years as Energy Ombudsman, complaints about billing have made up the bulk of problems brought to us. Poor management of re-platforming has been the major historic cause of detri- ment, damaging consumers and destroying brand reputation. Managed services are need- ing to become more flexible and responsive and are themselves facing competition from systems and services built by some of the newer suppliers. Finding platforms that can support great customer experience with efficient delivery will be part of the solution. However, delivery will continue to revolve around people. Culture and customer focus are even more challenging to scale than systems and as such will be an even more distinctive and defensible advantage in the market. The 2020s must be the decade when the transition picks up real scope and pace. They, and we, will be defined by our ability to build trust in a new and very different energy market. Technology, data and inno- vation will shape the decade in ways we can only guess at but execution, partnerships and people will still decide the winners and losers. Only this time the stakes are not just corporate, they're global. Opinion Energy in flux in 2020 Mike Wilks and Alain Bollack outline the key crunch points for energy utilities this year. N ext year's outlook for the energy sector in the UK looks to be equal parts challenging and exciting. The biggest challenge of our time is twofold: the need to meet rising energy demand while simultaneously reducing carbon emissions and reaching net zero quickly. To top this up,, customers are demanding a better customer experience. Net zero emissions by 2050. The world-leading commitment to net zero will be taken much more seriously by energy companies in 2020 and will require an increased investment in renewables and decarbonising heat. The customer is still king. Better data acquisition (particularly asset and customer data) is becoming a core focus for the utility sector in 2020. This is because organisations are feeling the need to better understand their customers to be able to manage their distribution demand and network better, adapt to the changes of distributed generation and create commercial opportunities. This will be a key to business success in the wake of increased competition from highly data savvy and modern organisations. Disruption continues. In 2019, disruptors like Ovo, Bulb and Octopus demon- strated the success of their customer engagement strategy, differentiating them- selves from the big six, and promising customers green energy, cheaper tariffs, time-of-use tariff and a simple on-boarding process. In 2020, these new entrants have plans to disrupt the market even further. AI and ML become mandatory. With the advent of smart metering and other data capture technologies that multiply volumes of data, it's highlighted to the sector that their existing analytical capabilities are not sophisticated enough to understand the incoming data and derive worthwhile insights. Although the cur- rent adoption of artificial intelligence (AI) and machine learning (ML) is already helping organisations to understand their customers better. But as data continues to explode, only those utility companies that adopt AI and ML in all aspects of business, including operations, assets management and customer engagement, will be the business that will survive the next decade. Technology to offset energy sector deficits caused by electric vehicles (EVs). EVs currently represent a small but rapidly growing part of the transport market. The transition to EVs should provide substantial benefits but car manufacturers acknowledge that major infrastructure gaps currently exist that are hindering the growth of the segment. This next year could be the one when distribution network companies lever- age the investment made in 5G and the Internet of Things, to be able to fill gaps to manage capacity and infrastructure availability. Using these technologies can help to optimise the network, allowing for mass market EVs to be charged. By putting distribution network companies at the centre of the transformation for EVs, it will help fill in infrastructure gaps and ensure lower carbon emissions. Conclusion Despite the utility sector continuing to lag behind other industries when it comes to digital transformation at this scale, we are already seeing a real push from both start-ups and legacy brands to drive in this direction, which should provide some confidence to consumers. There will be no excuse in 2020 for poor customer experience and consumers' expectations are only going to grow over the next 12 months, so companies are going to have to implement technology not only effectively but fast to keep up. Mike Wilks, head of UK energy network, and Alain Bollack, head of UK energy retail, Capgemini This is an abridged version of the full article, which is available online at: utilityweek.co.uk "It's clear there's still a huge job to be done around convincing the public that they can trust energy and water companies."

• Cover