Looking for Insights Beyond Energy

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Reflections on Ofgem's Latest Future Insights Paper on Consumer Trends.

Ofgem recently published the latest in their thought-provoking series of Future Insights, looking at potential developments in the energy supply market. It makes interesting reading and touches on the usual trends around big data, the role of automation in DSR etc. But the challenge for Ofgem – and the reason for doing this series of papers – is to ensure that its thinking is not constrained by the world as is.

So having identified the possibility that car manufacturers will look to sell energy (and associated ancillary services) as part of a package with the car, Ofgem doesn’t take this to the next step of asking whether in future customers will need to have more than one energy “supplier” (which could be done presumably with some sort of virtual MPAN if the car has its own circuit). In the wider world there’s discussion about “generation rent” - customers used to consuming everything as a service which makes this bundling of energy with the service it is delivering more plausible.

Having multiple suppliers to a single property would be a radical shift to the world as we know it and the systems underpinning it – but is precisely the sort of shift that the Future Insights work should be exploring.

And while Ofgem talks about the importance of big data it worries that suppliers have an unfair advantage in this new world because of their access to consumption data. But that is a very energy centric view. The data you need to do tailored service provision (or what marketeers now call “segments of one”) will include much broader lifestyle data. I would put my money on the Googles of this world rather than energy suppliers in the big data race.

And what does the current political mood across the country signal in terms of where energy might be heading. Before the current lurch to a price cap there was a lot of debate around “democratisation” of energy and in other sectors there is growing interest in dealing peer to peer rather than with international companies. That links back to Ofgem’s previous paper on local energy but also has implications for the role of suppliers.

It’s not Ofgem’s job to spot upcoming market opportunities but if it is trying to anticipate shifts that it as regulator should be thinking about then it needs to be really in tune with what consumers more generally are doing – looking beyond the narrow horizon of energy for wider trends that could change the energy landscape (provided the regulatory framework doesn’t get in the way).

We know that energy has been low interest and the retail market unchanged over decades (apart from some smaller scale but otherwise generally look-alike new entrants). Ofgem’s message is right that we shouldn’t expect that to remain the position in future but it needs to think beyond energy if it is to identify where the barriers and opportunities may arise.