The energy landscape has completely changed in the past 10 years. The ambition to drastically reduce the use of fossil fuels, and achieve a sustainable net-zero society, has boosted the demand for renewable alternatives, such as electric vehicles (EV). Although the emerging EV market is good news for electricity suppliers, it also comes with challenges. One such important challenge is: “How can we modernise our approach to tariff pricing and varying consumer patterns.”
NEW ELECTRIC REALITY
The existing electricity grid is based on the technological, social, and economic reality of decades ago. In recent years, a lot has changed in the way we deal with electricity. Not only has the demand for electricity increased enormously, but the times at which consumers demand electricity have also become much more unpredictable. This new reality is becoming even more imminent with the rapidly evolving EV market.
In addition, companies and end customers are no longer just electricity consumers, as they now also produce electricity themselves, using solar panels, wind turbines, etc.
CHALLENGE OF THE FUTURE FOR ELECTRICITY SUPPLIERS
The new electric reality raises the question of how the grid deals with the variations in power demand. But it also presents energy suppliers with an extra challenge. Energy demand forecasting has always been an important aspect in the purchasing and selling policy of electricity. With these forecasts becoming increasingly difficult, the profit model of electricity suppliers is under pressure.
The most important questions for electricity retailers are:
- How can I predict electricity demand as accurately as possible?
- How can I offer my customers competitive prices while optimising my profit model?
HOW EV OWNERS PICK THEIR ELECTRICITY SUPPLIER
One of the key reasons why people are interested in getting an EV because of its positive environmental impact.
So customers with an EV are not only looking for the best value for their money. They also want to opt for a supplier that focuses on renewable energy and sustainability.
ROADMAP FOR VARYING EV PRICING TARIFFS AND CONSUMER PATTERNS
How can you offer appealing electricity rates, while safeguarding and even optimising your profit model? The answer is easy: by developing a roadmap which allows you to cater for varying propositions and consumer patterns.
Your pricing roadmap should follow the evolution and regulations in your market and could look like this:
Product 1 for a reactive market: Charging discount on favourable hours
Phase one is the reactive market where less than 20% of the energy is coming from renewable sources. There is not much data available and energy usage and pricing are mostly based on customer profiles. The possibilities to impact consumer behaviour are limited, except for the standard time of use patterns.Here is what you could do with your EV tariffs.The customer is assured of a lower rate if he charges his EV during certain time periods, e.g. between 11.00 pm and 5.00 am. By incentivising your customer with a lower rate, you can adjust his charging behaviour and time. This pricing model helps to attract EV enthusiasts early on by making it cheap to charge their EV.
Product 2: Analyse usage pattern and include in pricing
Phase two is the measured market where 20 to 40% of the energy is coming from renewable sources.With the gradual rollout of smart meters, more and more usage data is collected. However, proactive actions are still not possible. By closely analysing the electricity consumption of customers, you can adjust the purchase of energy accordingly. The goal is to optimise your profit on this product and potentially lower the price even more by removing some risks of the first product.
Product 3: Bundled offer with smart meter, EV charger or battery
Phase 3 is the adaptive market where 40 to 60% of the energy is coming from renewable sources. In this phase, smart meters are rolled out and regulations like settlement at finer granularity become mandatory. It will allow energy retailers to act on the available data and steer the energy usage pattern of individual customers. In this phase, dynamic adaptive pricing will become more relevant.When a customer also buys a smart meter, EV charger or battery, you can offer a flexible pricing model which guarantees your customer the lowest rates at times when you can cheaply purchase electricity. By upselling additional products or solutions, you optimise your profit.
Product 4: Orchestrated charging and price optimisation
Phase 4 is the orchestrated market where 60 to 80% of the energy is coming from renewable sources. In this phase, the market is highly orchestrated to keep it optimised and stable. New players will emerge to help orchestrate everything. In this model, you take control of the customer’s electricity meter. At times when you have spare capacity, you decide to charge the customer’s car at a very favourable rate. The initiative lies entirely with the energy supplier, although the customer has the guarantee that his electric vehicle will be charged on time.
NEED HELP TO ENABLE DYNAMIC ADAPTIVE PRICING?
It is only a matter of time before every energy supplier will have to switch to dynamic adaptive tariff plans tailored to individual customers.
This is only possible if you have full insight and control over all historical and real-time data regarding customer demand and pricing. That is exactly what we do at Gorilla. We capture all your historical data from different platforms and bring them together to accurately calculate your desired outcome, be it demand forecasts, tailored price offers or real-time adaptive price optimisations.