The Australian Utility sector is a complex, heavily regulated, public-private environment with an aggressive green agenda. While solar and wind resources come in abundance, some states are facing a “day zero” situation; when all drinking water runs out. For years, consumers have been paying high prices and they rank Utilities among the worst for customer service. That leaves a lot of space for improvement in an increasingly competitive environment where new entrants are making inroads equipped with top-notch customer experiences and innovative products.



Australia is in the enviable position of being able to provide 100% of its own energy, which sits at 229.40 billion kWh/year. That said its Utilities are being rocked by an unprecedented wave of transformation. Some resources, like water, “are becoming scarcer due to a growing population, urban densification and climate change,” posing complex problems for producers and regulators. 

Others like solar and wind energy are increasingly being harnessed opening the door to tech companies developing storage capacity and exchange networks. At the same time, customers are facing increasing costs “whilst having higher expectations of Utilities.” 

Air pollution, and its associated health risks, is a concern in many parts of Australia. In great part, it’s caused by coal-burning power stations, mines and oil refineries that release pollutants into the atmosphere. 

Itching to switch

In Australia, electricity comes at a premium “mostly because of the country’s extraordinarily high network costs – which come courtesy of its uniquely long and stringy grid” and the fact that the grid has to be 99.998% reliable; the highest rate in the world. 

At the same time, “50 percent of customers have never switched providers.” Utilities could be lolled into thinking this was loyalty but in fact consumers are demanding simpler ways to compare providers to facilitate switching. Faced with increasing pressure, the Energy Council of Australia, which represents major electricity and natural gas wholesale and retail providers, has proposed to create a “reference bill.” 

The bill will represent the estimated energy use of a two-to-three-person household. Consumers will be able to compare what they pay with the reference and see if other providers offer better deals. Providers can use the reference as a starting point and offer various discounts to attract consumers. 

Water: A complex equilibrium

Australia is the driest of all inhabited continents in terms of rainfall. Climate change is aggravating this scarcity and increasingly affecting dense population centres. Just this May, New South Wales, the country’s most populous state, had to impose water restrictions faced with dam levels just over 50%. Now, several cities across NSW and southern Queensland are facing the possibility of what’s called a “day zero” situation; when all drinking water runs out. 

These changes are making water that much more precious and in need of careful management. While the management of water rests with the different state agencies in Australia, some Utilities play a key role in the management and distribution of water. 

But the dwindling supply of water and the resulting investment in new water infrastructure have caused the average price of distributed water to soar, which is putting pressure on consumers’ wallets.

Aiming for 100% renewable

Traditionally powered by coal and gas, Australia is now adopting renewable energy (solar and wind) at a record-breaking pace. It’s currently on track to get 50% of its electricity from renewable sources by 2025 and 100% by 2030. Over the course of 2018 and 2019, 7,200MW of large-scale renewables and 3,200MW of rooftop solar will be installed representing “224 watts per person per year, which is among the highest of any nation.” 

In part, this green wave is fuelled by Australians looking for alternatives in the face of increasing energy prices and a greater need for electricity brought on by the multiplication of modern connected commodities. Following some generous government incentive schemes, they’ve adopted solar PV rooftop units in droves and it’s estimated the generation of solar power will go from 4% in 2012 to 38% in 2040.



Surfing the green wave

Utilities must keep pace with Australia’s aggressive green energy agenda. “By 2050, it is estimated that customers or their agents – not Utilities – will determine how over $200 billion in system expenditure is spent and millions of customer owned generators will supply 30-45% of Australia’s electricity needs,” according to the Electricity Network Transformation Roadmap. 

This spells a dramatic shift in the role played by Utilities in the future. Some of them are already positioning themselves to surf this green wave. For example, in 2016, AGL announced it would no longer invest in gas exploration and production, a clear turning point towards more sustainable forms of energy production. 

One way providers can engage with customers is through the installation and maintenance of solar systems. It’s one thing to embrace renewable energy generation but it’s quite another to have the technical know-how to go the DIY route. So, providers can ingratiate themselves in an important way right at the very start of consumers’ journey into renewable energy. Companies like Origin, AGL, and Energy Australia for example, offer installation and maintenance services that give customers peace of mind. 

Another way Utilities can become meaningful in their customers’ lives is through battery storage and the ability to contribute to the grid and exchange with other prosumers. Several companies including Tesla and AGL have been testing battery storage within the Australian context. 

Facilitating exchange

Tech companies have been taking advantage of the changing environment in the Utility sector the world over offering ease and great customer experiences. A platform like Oxamii for example, is able to connect producers online to facilitate trading surpluses for profit. This makes installing renewable energy systems that much more appealing for customers. 

But Utilities and battery manufacturers can offer similar services. AGL for example, invites customers to join their Virtual Power Plant, a cloud-based network of connected solar batteries that are managed remotely to balance needs across the grid. It’s offering $280 in bill credits over the first year. Sonnen has also created a community that allows its customers to connect and share their production with one another. 

Services are the way of the future

In 2014, a survey placed energy Utilities as having the worst customer service among a variety of sectors. A meagre 9% of respondents said they were getting “excellent” service from their energy provider. “This level of dissatisfaction has spurred customer churn as consumers look to new industry players.” 

A Utility market where switching is easy opens the door to new web based entrants creating additional competitive pressure on providers. In this context, Utilities need to differentiate themselves and offer added value in order to attract and retain customers. 

How Utilities have managed change in the UK, where the energy market is cut-throat, could provide some clues for their Australian counterparts. E.ON for example, which is set to enter the Australian market through its purchase of Innogy, has developed a strategy to improve and redefine innovative, high quality and digitally orientated services beyond the meter, as well as move towards alternative tariff models. 

It has done this by bundling energy contracts with home services in partnership with HomeServe. As a result, the company has repositioned itself as a more integral part of customers’ homes and speaks to them in a different way, not focused on price but on service. As well as creating a tool for acquiring and retaining customers, it provided E.ON with an additional recurring revenue stream. 

Service contracts can cover anything from the installation and maintenance of heat pumps and air conditioners, water monitoring through smart devices, all the way to emergency repair of the water supply, plumbing and electrics. These provide added value that’s sure to benefit customers directly where they need it most.

Preserving water

With scarcity comes great responsibility. A shower using a modern fixture will use approximately 9 litres of water per minute. If you shower once every day for 15 minutes, that’s almost 50,000 litres a year. 

Now imagine you have a leaky pipe or sprinkler system. Not only would you be wasting water, probably the most precious resource in Australia, but you would also be paying more for nothing. That’s where Utilities come in. They can offer advice, support and tools, as Unity Water, or even consider water monitoring devices thus playing a positive role in customers’ lives.

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