Significant changes are under way in the power industry. The customer is now in the driver's seat and closer cooperation is crucial to success in the market of the future.
New technology, digitalisation and new business models are making major changes in the power industry. The rate of change varies from market to market, but there is no doubt that changes are happening says Steinar Bysveen, Executive Vice President of Wind Power, District Heating and Projects.
"Some trends are global, others are local for the time being. We don’t yet see many signs of all the changes in Norway, but that doesn’t mean they aren't happening or that they aren't big," he says.
There are several factors driving these changes. "Technology, like solar energy and batteries, enables customers to create their own energy solutions," says Bysveen. "The power to determine what these solutions will look like lies with the customers, and these local solutions will have an impact on the overall integrated system."
Digitalisation makes it easier for customers to make choices. "Examples include common measurement databases that anyone can access, and simpler routines for choosing a new supplier," he points out.
New business models will arise from customer demands.
"The move towards more local solutions will lead to customers needing other types of services and products," says Bysveen. "Those intending to serve this market must think in new ways. This includes equipment, but also energy management and advisory services," says Bysveen.
With more wind and solar power in the system, there will be a need for, for example, backup capacity when there is little wind and sun, though in such a way as to avoid overinvesting in the grid.
"Consumption and production must work together to exploit the flexibility that lies in the overall integrated system," says Bysveen.
In Norway, the investment in the power system is equal to the investment in all other land-based industries. The efficiency of the energy system plays an important role.
"The changes impact us in several ways. One of the things we are working on is how to combine solar systems with for example green power supply contracts as part of a comprehensive customer solution strategy for commercial customers. New technology also provides new opportunities for power trading, and it's necessary to have a debate on whether the design of today's power market is appropriate to meet the needs of the future," says Bysveen.
Within the district heating area there will also be increasing demand for new products, such as ones for cooling and managing the customers' heating plants. "In general, cost efficiency and energy management will be even more important in the coming years," he says.
Initially a heating supplier, Statkraft District Heating has now become a full-service supplier of environmentally friendly heating solutions. A new customer focus has generated newservices and products, and has opened the door to an exciting partnership with Rockwool.
1.2 million Norwegians either live or work in buildings whose power is supplied by Fjordkraft. The reason for the company's fantastic journey since its formation in 2001 is "the golden triangle", or, what’s good for the customers is good for the owners and employees.
Elkem's Norwegian smelting plant is one of Statkraft's largest customers, and the two companies are in frequent contact to manage existing contracts and develop new opportunities.
Bjørn Holsen is Director of New Business Development in Norway, a unit that develops new business areas for Statkraft. "Most of what we work on is within established partnerships or in collaboration with others," he says.
"Already there we have a customer dimension that is very prominent compared to other parts of Statkraft's business," he says. One example is Silva Green Fuel, which was established in 2015 together with the Swedish forest industry company Södra.
"The company was established to produce biofuel from wood, but the technology has the long-term potential to use other renewable products," says Holsen. Plans are under way to build a demo facility on a significantly large scale.
"In this phase we are most concerned about making the technology work," says Holsen. "The goal is to eventually build a plant in full scale. If we get there, the customer dimension will become extremely important because a completely new market will be developed. We are already in discussions with fuel distributors and large logistics companies."
Along with Agder Energi, Statkraft is also the dominant owner of Grønn Kontakt, the electric vehicle charging station operator. "Here, too, the customer dimension is very important. The focus is not so much on selling kilowatt-hours, but on delivering a service," says Holsen. "Grønn Kontakt aims to make it easy for customers to drive green, and it is the customers who decide if we succeed."
Another new business area is to develop sites for establishing large data centres. "In Statkraft, we’ve have been accustomed to customers contacting us, but now we have to adapt to a new reality and be more proactive," he says. "We have to put ourselves in the customers' shoes to develop products they are really looking for, not what we think they are looking for."
By using partners with specialist expertise, the processes go much faster than if Statkraft had to develop its own expertise in the new business areas. "We’re moving increasingly from selling commodity products to offering more specialised products where customer preferences already exist," says Holsen. "We have to focus on the customer in a completely different way than we have been used to."
The charging station operator Grønn Kontakt is investing NOK 100 million in fast chargers in 2017. Trond Simonsen convinced his partner and became a customer and electric vehicle enthusiast.
France is opening up its energy market, and there is a large need for new services. Statkraft invited French market players to a customer day in Düsseldorf, Germany.
Brazil is a key growth market for renewable energy. With close customer dialogue, Statkraft Brazil aims to create new business opportunities.
This is exactly what Torsten Amelung has experienced. He leads the unit New Markets in the Market Operations & IT business area, located in Dusseldorf, Germany.
"In 2011, we began to think about how Statkraft could establish itself in a market where more and more small businesses and households produce their own power via rooftop solar cells," he says. "We developed two different models, but the big mistake we made was to assume that it was only the financial factor that played a role for the customers."
After a year and conversations with 70 potential customers, only a couple of them had actually installed solar cells.
"Then the alarm bells began to ring and we realised that our potential customers wanted something different than us. The customer's decision does not begin with the financial factor, there are many other factors that play a role: sustainability, climate and renewable energy," says Amelung.
An interesting customer group is the RE100, a world-wide initiative uniting more than 100 companies that have committed themselves to 100 per cent renewable electricity by 2025.
"We must understand their strategy and develop solutions that are tailored to them," says Amelung. "They want to buy renewable energy from plants in geographic proximity to their locations. They expect partners to be willing to join them when they establish themselves in new places. They are interested in companies that share their values and that enjoy a high level of market confidence. I think Statkraft can really make a difference in this field."
In the next four months, his team will interview 100 representatives from RE100 companies, those committed to going 100 per cent renewable. "We will find out what problems we can solve for them, instead of presenting ready-made solutions," says Amelung.
Text: Sissel Fantoft
Photo: Hans Fredrik Asbjørnsen
The article has also been published in Statkraft's magazine People & Power no. 2/2017.
Torsten Amelung, head of New Markets in Statkraft, believes that the customer journey is about identifying what problems Statkraft can solve for its customers and not about presenting ready-made solutions.
19. Dec. 2017