How electrification and decentralization are revolutionizing energy value chains

Switching to 100 percent renewable energy and the widespread electrification that goes hand in hand with it don’t just represent a technical revolution. They are also fundamentally changing how energy is bought and consumed. Only companies that create an integrated product experience for their customers will be fit for the future. And cross-sector energy management is indispensable in this context.

The changing energy market: convergence in fulfilment and sales

Not long ago, electricity, PV systems, EV chargers, heat pumps, energy storage and (electric) vehicles were sold separately. Usually, power suppliers, installers and car dealers controlled the last mile of their respective domains through a two-tier distribution chain. As a result, production and distribution chains were set up separately and customers had to navigate each product area individually.

In the last five years, a change has been taking place: we have observed more and more convergence on the distribution side and all sales levels. The first providers have started bundling up to three sectors (PV, EV chargers and electricity) into a complete package for end customers and are taking control of the last mile. Device manufacturers, in particular, have been adopting this strategy. This often involves bypassing wholesalers and moving up one sales level. PV inverter manufacturers are turning into complete system providers, while energy storage manufacturers are turning into integrated energy service providers. The latest trend: PV module manufacturers are expanding their portfolio to include inverters and EV chargers. Additionally, more and more wholesalers and distributors who previously supplied installers with individual components are now turning into full system providers, creating their own end customer brands and including electricity tariffs.

System providers already dominate today’s market. When looking at it closely, however, we see that the market is still highly fragmented and diverse with companies and energy providers in vastly different stages of progress. This is reflected in the range of offerings. End customers have a wide choice – they can turn to installers or system providers such as Solarwatt and Sonnen or to energy suppliers.

Digitalization and its influence on the customer experience

Companies differ enormously in their approach to and level of progress with digitalization. Many energy suppliers, EV charger manufacturers and other companies have not yet digitalized their offerings to any meaningful extent. They continue to sell traditional hardware systems and only sporadically employ digitalized processes for this purpose. PV systems, EV chargers and electrical installations may be bundled and customers may receive the respective device manufacturers’ apps, but this is where the customer experience ends.

Efforts to digitalize often go hand in hand with a pronounced customer-centric approach. Currently, however, few companies combine all home energy needs into their customer offerings. Most car providers are only in the early stages of exploration or have made no start on this at all. Other than the EV and sometimes an EV charger, end customers are not being offered a holistic, cross-sector solution. On the other hand, innovative companies such as Solarwatt are progressing much faster toward this goal: they bundle their hardware offer including a PV system and an EV charger with the offer of an electricity tariff and closely cooperate with a heat pump manufacturer. And they intelligently connect and control this complete system with a home energy management system (HEMS).

What does sector coupling really mean?

True sector coupling, however, does not just entail a convergence on the sales and installation side. It must also involve device connectivity, self-consumption optimization and a grid-optimized approach.

We expect the next major development in sector convergence to consist of integrating heat pumps and EVs into existing systems and value chains. The challenge here isn’t so much the technical feasibility itself, but more the integration of the sales and fulfilment processes. While today more or less all installers and car dealers benefit from the boom in demand for PV, heat pumps and EVs, we believe that in the long run only integrated solution providers will be best positioned. As system integrators, they will master the interplay of PV, EVs and HVAC and they will implement their processes on a mass scale.

We need a holistic system experience that meets both end customer needs and the requirements of the grid. End customers should not have to operate five apps and multiple gateways. Instead, they should receive one sector-coupled HEMS with one corresponding gateway that connects the five device classes plus an electricity tariff into a holistic, digital product experience.

We have worked with companies and energy providers who share our vision and want to offer end customers an integrated energy product experience for many years. Do you share this ambition? No matter what stage of convergence you are currently at, Kiwigrid’s future-proof HEMS supports you all the way to complete sector convergence.


Read detailed information about Kiwigrid’s HEMS and our new Energy Manager VoyagerX.

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