01 November 2018
Tieto conducted an energy market research among 80 energy retail and distribution company decision makers in the Nordics. According to the survey changing customer demands and internal efficiencies guide energy companies’ strategy, while uncertainty about business survival in the changing market prevails. The survey also shows that Nordic utilities share the same challenges including lack of clarity on the impact of the new data hub model and its adaptation and companies’ role in the future utility market.
Growing demand for green energy and smart home services
The energy market will change dramatically in the next few years due to tightening market regulation that brings more investment demandson energy companies but also due to consumers’ growing demand for green energy and smart home services. All participants in the survey agree that renewals like solar panels, solar batteries and home automation will forever change the energy market. Traditional ways of working and communicating with the consumers are also rapidly changing.
Decentralized Energy Systems’ market and data hub model
The view on what role companies will have in the new Decentralized Energy Systems’ market, in which energy is produced close to where it will be used, changes from a traditional utility to a new type of energy service provider offering energy service packages to the consumers. The views are also fragmented between countries: the Finnish and Swedish energy companies see themselves as partners, whilst Norwegian companies position themselves as market leaders in Decentralized Energy Systems’ market.
The energy market is about to adapt to the market data hubs, which can provide all parties with equal access to the information and enable faster processes. Based on the survey results, the impact and costs for entering the coming market data hubs are widely unclear, except in Norway, where market hub implementation will take place already in 2019.
Differences between distributors and retailers
For companies the most important business benefits from digitalisation are seen in increasing efficiency and improving the customer experience. The survey shows some clear trends among energy distribution and retail companies: distributors are focusing on operational efficiency, whilst energy retailers concentrate on customer satisfaction in the middle of changing customer demands.
The retail segment is moving from the traditional model selling kilowatt-hours to new offerings providing, for example, smart home services to the consumers. This is a natural evolution as the companies are facing more customer churn and new competitors are entering the market. In spite of drastic changes in their roles and offering, the energy retailers also see lot of new possibilities in partnerships and versatile cooperation outside the energy industry.
In the distribution business, regulation puts pressure on operational efficiency. Distributors see digitalization, automation and new technology as their primary means of increasing efficiency and saving on costs. The new regulation and data hub model require real-time energy consumption measurement.
“What we already can foresee is tightening competition in the market. There will be new companies from outside the utility industry entering the energy market with a high ambition to win a big share of the current Nordic market,” says Olof Ferenius, Head of Energy Utilities at Tieto.
Tieto provides innovative solutions for the Nordic energy market including Tieto Smart Utility, a modular software as a service solution designed for companies engaged in energy retailers, energy distributors and multi utilities. The solution addresses the requirements stemming from present and forthcoming regulation of electricity markets. The scalable cloud service also meets stringent information security requirements by utilizing Tieto's Nordic data centres. This is the first time Tieto has conducted its comprehensive Nordic Energy research in Finland, Sweden and Norway.
Olof Ferenius, Head of Energy Utilities, Tieto
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Mikael Normelli, Head of Sales, Energy Utilities, Tieto
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Tieto aims to capture the significant opportunities of the data-driven world and turn them into lifelong value for people, business and society. We aim to be our customers’ first choice for business renewal. In addition to our expertise in software and professional services, we also take strong advantage of ecosystem and innovation possibilities. www.tieto.com