Globally, organizations across all industry segments are under pressure to contribute towards long-term sustainability, with focus on reducing carbon emissions. Several organizations have been reporting and declaring their carbon footprint through the Carbon Disclosure initiative. Over the last few years, the spotlight is on the energy industry that is experiencing increased pressure from their customers, regulators and shareholders to take necessary steps to reduce carbon emissions. This implies a radical shift in the way energy is sourced, transmitted, and consumed. Coal footprint in energy generation is a very large component of the emissions. Similarly, the transportation sector contributes to more than a quarter of all carbon emissions and the shift from fossil fuel vehicles to electric vehicles (EVs) or emerging fuel cells is equally important. 

Beyond selling energy

For many years, energy companies have been driving energy efficiency programs to reduce the energy consumption through behavioral changes and incentives. Some have experimented with a partnership model with white-goods manufacturers and ran campaigns to help their customers switch to energy efficient appliances.  With developments in IoT and advanced analytics, energy companies are able interpret the energy consumption signatures and determine the type of appliance and amount of energy consumed by these appliances. This has created interesting business models around monetizing this data, though many are still in the pilot stage. Maturing renewable technologies such as Solar Panel/storage along with falling prices have created a conducive market place that saw the emergence of new entrants with innovative Electric Vehicle (EV) and Behind the Meter solutions (living services).  These help customers reduce consumption, decarbonize their personal transport and participate in the energy economy through feed in tariffs, community batteries/nuanced demand response programs. 

Getting the strategy right

Traditionally, energy companies have been ambivalent about promoting zero carbon options given the anxieties about protecting their traditional revenue streams. Energy companies are looking to shape a future where de-carbonization makes sound economic sense, beyond being an altruistic goal. Energy companies, through a combination of partnerships, acquisition of niche platform companies or through internal innovation initiatives, have also incubated and launched similar solutions. Typically, it was set up as a separate business unit to push new products and services and as a reactive strategy to compete with the new entrants. However, scaling has remained a big challenge.    Having a separate business unit also resulted in missed opportunities for cross-sell and up-sell and optimizing their cost to serve. 

In our Energy 2020 blog series, we have been discussing the energy transition and how it impacts the customer mind-sets and preferences. Customers have come to appreciate the dangers of unbridled exploitation of the environment more than ever.  They are eager to play their part in building a cleaner world. As we look into a future where ecology fuses with economy, we examine how energy companies can reimagine their approach to help their customers de-carbonize using Energy 2020 transition as a springboard.  

A customer led approach to de-carbonization

Fundamentally, energy solutions beyond energy commodity are key enablers in reducing the carbon emissions and as such should be treated as product offerings to help their customers to reduce their carbon footprint. Energy companies have, for several years, reported their carbon emissions through a framework that has been defined by the regulators and/or voluntarily through the Carbon Disclosure project. Energy companies can leverage such a framework and evolve their product offerings to help their customers de-carbonize, capture the carbon displacements achieved for their customers and where appropriate, leverage such displacement to fulfill their goal of achieving NetZero goal. Energy organizations can also structure their portfolio of their products and services aligned to the customer segments covering B2C and B2B with an intent to de-carbonize as depicted below.

Energy organizations can consider adopting a ‘portfolio’ approach by mapping their customers’ existing energy footprint, setting de-carbonization goals and developing/implementing the right energy products and services to achieve these goals. These can be scaled using a suite of digital tools (especially for the B2C segment) complemented by appropriate human touch points through the customer service channels. For the B2B segment, these solutions are tailored to individual customer needs through the account managers. 

The framework can include the following steps:

1. Review customer’s current carbon footprint including their scope 1 and 2 emissions
2. Develop personalized plan that covers commodity energy (from renewables) and other products and services based on customer’s de-carbonization goals, affordability and other factors
3. Leverage their partner ecosystem (where necessary) to deliver a comprehensive suite of products and services for each customer 
4. Assume responsibility of executing the de-carbonization plan for their customers, review and refine their portfolio to meet their energy demands as well as de-carbonization goals.  For most customers this provides a convenient ‘one stop’ approach to realize their de-carbon goals with optimal investments
5. For energy companies, this provides a solid foundation of customer relationships and behavioral insights, allowing them to go deeper into the customer ecosystem, innovate new business models and grow their revenue streams. Energy companies can aggregate the de-carbonization achieved across their customer segments and attribute it towards carbon displacement in their reporting thereby realizing their NetZero goals 

Enabling ecosystem

The execution of the suggested framework will need a robust digital enablement suite that is immanent to the underlying business models. Pervasive digitalization in all aspects of customer engagement including product design & launch, customer engagement tools (online energy calculators, scenario simulators, gamification etc.), customer segmentation & analytics, online energy marketplaces, and robotic advisory & execution will become increasingly critical for scaling the business as well as delivering customer satisfaction. The B2C business could benefit from a ‘digital led’ model (with agent support) whereas the B2B business will continue to benefit from an account management led strategy but amplified through digital. Utility companies also need to focus on having their IT platforms and solutions based on modern IT architecture principles that enable business agility, flexibility and scalability.  Government/regulatory policies that are consistent and carbon friendly will help utility companies make bold bets without anxieties about their past financial investments and deliver profitable/sustainable growth to all stakeholders.  ‘Growth through de-carbonization’ may cease to be an oxymoron for the utilities after all!

Ravindra Balija

Head of Digital Technologies and Architecture in ENU Digital at Wipro

Ravindra has overall 25 years of IT experience and has been working with Energy and Utilities customers for the last 18 years. He currently heads the Digital Technologies and Architecture in ENU Digital at Wipro. Ravindra helps Energy and Utilities customers Application modernization leveraging public cloud platforms, serverless and cloud native architectures. He also focusses on distributed and decentralized technologies such as cloud, IoT and Blockchain to help customers with Energy Transition with focus on EV Charging Infrastructure.

Reach out to him at ravindra.balija@wipro.com for further information.