Why customers are still left behind in the 2024 energy transition

A temperature check on the global energy experience

The energy transition is undeniable. It’s a deep, far-reaching, and ongoing process with the potential to significantly impact both climate change and financial returns. Regulation, industry structure, and value chains have evolved dramatically since the early 2000s. The three-Ds – digitalisation, decarbonisation, and distributed generation – are no longer emerging trends but have become mainstream forces shaping the industry.

However, when we shift our focus from industry advancements to customers, the picture changes. For many, the transformation is less evident. Despite living in an energy-transitioned world, most people are still passive consumers rather than prosumers, with little understanding of their energy bills or engagement with providers and no intention to adopt new behaviors for more efficient energy use. The industry may have moved into the future, but customer relationships feel stuck in the past.

Through our global work at Designit, we've seen that consumers' lack of interest in energy is a consistent theme, with engagement often only spiking in response to external factors like rising prices or geopolitical tensions. Yet, the majority of consumers remain disengaged, making it difficult for the industry to forge meaningful connections.

The energy industry is in 2024, and its customer relationships are in 1995

This disconnect presents significant challenges for the energy sector. Renewable energy sources are lowering electricity costs, and the notion of ‘free electricity with paid services,’ akin to the telecom model, is becoming increasingly plausible. Just like telecoms and payments sectors in the past, the energy industry is navigating bundling, unbundling, disintermediation, and verticalisation, with customer relationships becoming key to success.

To better understand what could be the future of these relationships, we've conducted a global temperature check of the energy industry. Differences in regulation, resource access, energy mix configurations, and customer behaviour create a diverse landscape. In some markets, energy supply is fragile, while in others, the cost of electricity has plummeted. Some lead in electrification, others in behavioral change. The energy transition may be here, but its impact varies widely across regions.

Global insights to drive local change

At Designit, our work focuses on harnessing these insights to inform innovation and customer adoption strategies. We've identified five key questions to guide the future of energy customer relationships:

• Can the energy industry become as meaningful to customers as the energy it provides?
• How can customers navigate the increasing complexity of their relationship with energy?
• How can we empower customers to better understand the link between their lifestyles and energy consumption?
• We're running out of energy transition early adopters. How do we activate the next wave of engaged customers?
• The many positives of the energy transition shouldn't hide the risks of leaving already vulnerable consumers behind. How can we achieve commercial and environmental goals doing no harm?

The push for customer relevance

While customers often say they just want the energy they need, not all energy brands or customer relationships are the same. With renewables driving down costs and margins, the diversification of value-added services becomes critical. Digitalisation is also attracting new players adept at building great customer relationships.

Stay tuned for part two, where we’ll explore how the best global customer experiences are shaping the future and how some companies are tapping into people's intrinsic motivations to stay relevant.