Consumers across the world are becoming more eco-conscious than ever before, and Australia is no different: 78% of Australians now support a target of net-zero emissions by 2050, and 60% say that we need to start taking action on climate change now no matter the costs. For Australian Utility companies, this represents a stark warning that they must adapt for a greener future if they want to retain eco-conscious consumers.
The global drive towards renewable energy sources means a significant upheaval in how the Utility industry operates, invests, and innovates. At the same time, however, the transformation on the horizon offers a variety of new opportunities for Utility providers to re-position themselves as leaders in the green revolution and reap the benefits accordingly.
How the drive for renewable energy has impacted the energy sector
With global pressure on Utility providers to adapt to the stark reality of climate change, the industry has faced a growing need to adapt and revolutionise. This has mainly manifested as a renewed focus on developing renewable energy sources, requiring heavy re-investment from energy companies.
This comes at the same time as demand for energy continues to increase, as the world’s growing reliance on technology in both business and our everyday lives increases consumption worldwide. Energy companies are therefore having to not only change how they produce power, they’re also being made to produce more of it and re-evaluate delivery methods to improve efficiency.
Furthermore, growing negative consumer sentiment towards “unclean” energy sources have become a major driver of the current trend. More and more people (and households) are becoming green-conscious, meaning that customer decisions are now often based as much on a Utility provider’s green credentials as their prices and service.
Why it’s critical for Utility providers to evolve
Climate change and the push for greater renewable energy generation represents a seismic shift for the Utility sector, as those that fail to keep pace with green developments are likely to fall behind greener competitors. AGL, one of the biggest power generators in Australia, provides a perfect example of this.
AGL’s profits have plummeted in 2021, with a further decline of between A$220-340 million forecast for the year to June 2022. This has largely been driven by an influx of wind and solar power onto the energy market, which generally represent much cheaper production costs compared to the coal-fired stations that make up the bulk of AGL’s portfolio.
According to AGL Chief Executive Graeme Hunt, “Financial year 2021 was one of the toughest energy markets we have seen.” With global investments in renewable energy on the rise – hitting US$500 billion for the first time in 2020 – this trend only looks likely to continue, meaning there are stark challenges on the horizon for Utility providers that remain married to fossil fuels at the expense of renewable investments.
The upside: How Utility providers can re-position as green leaders & reap the benefits
While the shift to renewable energy may present huge and unavoidable challenges in the industry, it also presents exciting new opportunities for reinvention.
According to recent research from Oxford University, only 10% of the world’s Utility companies are currently prioritising investment in clean, renewable energy. What’s more, 60% of those investing in renewable energy are doing so in parallel with continuing investments in fossil fuel power generation, with only 15% actively reducing their fossil fuel portfolios.
The study’s author, Galina Alova, claims this represents a huge danger to Utility companies who are failing to adapt. “Utilities’ continued investment in fossil fuels leaves them at risk of stranded assets – where power plants will need to be retired early – and undermines global efforts to tackle climate change,” states Alova.
The failure of many companies to reposition offers other companies with immense opportunities, however. By investing in renewable energy sources and divesting from fossil fuels, Utility providers can outmaneuver their competitors. While fossil fuel-driven companies flounder due to falling profits and stranded assets, green providers can cater to the eco-conscious market and vastly increase their customer acquisition.
The green revolution also offers the opportunity to adopt new business models. Micro-generation and off-grid energy supplies are a promising growth area for Utility companies to expand into, with over 3GW of small-scale solar capacity and 23,796 small-scale batteries installed by Australian households in 2020 according to the Clean Energy Australia Report.
Meanwhile, the 26 corporate renewable power purchase agreements (PPAs) made in 2020 represented a combined investment of over A$2 billion, meaning corporate green initiatives also present a rewarding source of finance for green innovators.
Lessons from other industries adapting to the renewable revolution
To get a feel for how they can adapt to a renewable future, it can be helpful for Utility providers to look at how other industries have sought to leverage green technology. For example, the DHL Supply Chain’s Western Sydney distribution centre provides a useful case study for leveraging renewable energy in the logistics and shipping industry.
At first glance, the distribution centre’s solar installation looks similar to any other commercial solar power system. However, it’s actually the world’s first urban solar plant that can simultaneously generate electricity for on-site usage and directly trade it on the National Electricity Market (NEM).
The system is driven by Epho’s Bright Thinkers Power Station, an innovative control system that segregates electricity through separate channels and uses algorithmic calculations to determine the optimum mix to be used and traded. The BTPS allowed DHL to install its 1.7MW solar system (double the size needed to offset on-site power needs) without worrying about over-production, as excess electricity is efficiently transferred to the NEM.
Systems like the BTPS have the potential to unlock gigawatts of solar power in industrial rooftop space, allowing non-Utility businesses to profit from the renewable energy revolution. Utility providers can also seek to profit from such innovations by investing in similar smart power management systems.
How the green revolution is affecting global Utility providers
Lessons can also be learned from how Utility providers are faring in other countries when faced with the renewable energy boom. For instance, America has seen its coal industry struggle to keep up with renewables in many states.
Coal has seen a massive slump in profitability. Accelerating plant closures and reduced consumption has been reflected in the slowdown of coal production over the last few years. To give perspective, the total world production of coal in 2020 was 7,575 Mt down from 7,833 Mt in 2011. Exports have helped the coal market to stay afloat, but experts predict that even exports will soon begin to slump.
Fortunately, the upswing in renewable energy production is creating new jobs to fill the gaps left by coal closures, at the same time as cutting consumer costs. Creating new renewable energy generation has rapidly become cheaper than running existing coal plants, and resolutions for 100% clean energy production set by states and corporations have given the green boom even more momentum.
Because of this, the renewable energy sector has become one of the fastest-growing employers in America. A report from Clean Jobs America found that 3.3 million Americans work in the renewable sector – three times more than in fossil fuels – while the US Bureau of Labor Statistics forecasts that the two fastest-growing jobs through 2026 will be solar installer and wind technician.
All of this shows that renewables are an impressive growth area for Utility providers, with fossil fuels becoming rapidly less profitable. Australian Utility providers can therefore learn from the situation in the States by prioritising their investment in renewable energy to make full use of the massive growth the sector is experiencing.
How Sigma Connected fits into the renewable energy revolution
Times of rapid change and seismic shift mean that your business needs all the support it can get to keep running smoothly while undergoing huge changes and repositioning. Luckily, Sigma Connected is here to help.
Our bespoke customer contact solutions include acquisition and retention, customer services, staff training, and more. The green revolution is bringing with it a renewed focus on the customer experience and customer-centric business models – so it’s vital that you’re equipped to provide the highest levels of customer service possible.
We offer end-to-end customer contact outsourcing solutions, from sales and arrears to retention and collections. We take a data-driven approach to making targeted improvements to customer service processes in order to enhance the customer experience and keep customers loyal to your business.
We also deliver staff training to enhance your team’s capabilities and drive more efficient customer support. Furthermore, we offer support and guidance in quality assurance and compliance issues to help ensure your business delivers a reliable service at all times.
How we can help the Utility sector
By leveraging data to enhance customer service outcomes, primarily complex interactions where self-service or AI fall short for the customer; and providing training to improve how your team handles customer contact, Sigma Connected enables Utility providers to maintain a much higher level of customer satisfaction.
With consumers becoming much more invested in eco-friendly practices and other issues that go beyond just their monthly bill, it’s vital to ensure all your customer contact works to keep them on your side. Customer retention is just as important as acquisition (if not more so), and it’s set to becoming an increasing challenge, so investing in customer service is vital.
For further information or a wider discussion on how we can help your business, contact us below.