Finnish energy companies will conquer the world or will they?

Could energy selling one day be transformed into a life-style service, enabled by smart meters and automated services? Will users of the future one day shop online for their dinner, a movie and a side dish of energy? If so, Finland is well-positioned to lead the way.

Finland already a leader in smart metering

Digitalisation is not the key to next generation services but the enabler. Finland was the first country in the world to digitise its electricity metering with smart meters and remote monitoring on a large scale. Electrical energy consumption in almost all of Finland’s 3.4 million smart meter points is now measured hourly, with the data available to customers the following day. Compare this with Germany where the most meters are still manually read and energy companies are pushing consumers to accept smart meters only in the next few years.  Customers in Finland also have automated invoicing, which they can pay on Netbank. Compare this with some parts of the US, where you typically heat your house with natural gas then drive to a local office and pay with a written check. So Finland has successfully taken the first step to a new future with fully digitised energy sales. But what’s next?

Next step to get users closer to their data

Electricity consumption data tells us something about people. Just like Facebook, Finnish energy companies now have valuable information on customer behaviour patterns. How can providers find new ways to maximise the value of that data and simultaneously use it in discreet way?

At the moment only 5% to 10% of Finns check their consumption online, even though almost all energy companies have their own web portals available. Electricity in Finland is relatively cheap and consumption data not that interesting. So first, energy companies need to find ways to get their customers more involved with their data?  Then they need to start coming up with compelling energy services that will enhance the customer experience in ways that people would be willing to pay for.

Find ways to enhance energy user experience

At my home, we have geothermal ground source heat pumps installed. A couple of months ago a fault developed in the pumps, but we only discovered it at the end of the month when we saw our family energy bill, which had doubled. When I called the company, the representative was able to identify the exact day when the system had developed a fault and our consumption had increased to twice the usual amount.

What if there’d been some kind of automated warning service in place to inform me of the fault at the time? And what if, the energy company had come over the next day to fix the problem? These are services I would be ready to pay for. Geothermal heat pumps are not commonly sold by energy companies and they don’t normally come with full service agreements. You either fix them yourself or go out and search for someone to come over and do it. Compare this with district heating, which is essentially a heating service with a lifetime guarantee. One enlightened energy company development manager told me: “If we lose a district heating customer to geothermal heat pumps, wouldn’t it be better if we were the ones to sell them the pump, the electricity and service for it as well.” This thinking demonstrates a larger vision and understanding of the changing market situation.

And what about leasing? In the same way that consumers are moving away from owning cars to leasing them, or even just buying ride space, city energy companies should also be moving towards leasing agreements for heat pumps, solar panels or other distributed renewal energy sources  like windmills. Which company will be first to start leasing smaller size of windmills in Finland? I´m pretty sure there would be a bunch of heavy industry companies using masses of electricity which would welcome this opportunity even just for good PR purposes. These kinds of options would give users the opportunity to generate their own green energy and sell it back to the grid, without having to own the infrastructure. It would also help promote the feel good eco-friendly image that Finnish energy companies are moving towards.

VTT scientists and engineers are working with our energy companies now to brainstorm and develop ideas for new services that bring value to consumers as well as to the energy providers. But there are many that are not even yet imaginable in today’s context.

Time to act today!

Sadly, some of our energy companies lack vision; others lack the funds; while some are just waiting for something to happen, perhaps to be acquired, instead of reinventing themselves for their own future. But the frontrunners in Finland are hiring up and preparing for action!

There is plenty of evidence already to suggest that buying productized energy services will be the next big thing in the emerging lifestyle services sector, which is now dominated by broadband, television and media streaming. Think back to fifteen years ago. Only a few people had signed up for satellite TV or paid entertainment services. Now nearly everyone has Netflix or HBO and is ready to pay for a whole range of streaming services.

It’s time for Finnish energy companies to ask themselves if they want to continue at the top. If so they need to figure out what it will take, then get cracking! If the energy sector is auditioning now for its own Netflix launch then Finland would be my top pick for the starring role.

Read more:  www.vttresearch.com/services/sustainable-and-smart-city/energy 

 

juha_hamekoski
Juha Hämekoski
Head of Sales and Customer Partnerships
juha.hamekoski@vtt.fi

 

 

This is the second in a series of VTT Smart Energy blogs, bringing you the very newest thinking and action around Smart Energy. Stay tuned for our next blog post in Autumn about Smart Otaniemi ecosystem – open playground for innovation, by Kari Mäki, Research Professor.

Have you already read our first blog post about the essence of Smart Energy by Sanna Öörni?

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