High energy prices for consumers combined with a top ranking in the share of renewable energy in the electricity mix – these are the conditions that give the German market a special position in Europe that makes it easy for a wide range of energy startups to enter the market: They score points with offers that are more transparent, more green, and more cost-efficient than the competition. Their business model is built on fully digitized processes. What role does the highly efficient SaaS solution from powercloud play in this context?
Nowhere in Europe are energy prices as high as in Germany, where levies and taxes make up a large proportion of those prices. Users currently pay a renewable energy charge of 6.5 cents per kilowatt hour. The revenue flows into the funding for green electricity and with considerable success – as can be seen in the growing proportion of renewable energy across the entire spectrum of energy production. In this context, Germany occupies third place in Europe, producing around 46 percent. The proportion is only slightly greater in Denmark and Ireland, according to a recent analysis from the Agora Energiewende and Ember thinktank. Measured purely in absolute terawatt hours, however, Germany is far in the lead when it comes to production of green electricity – even in comparison with other larger European countries such as France or Italy.
Increasing prices lead to customer fluctuation
An end to the German energy-price spiral, however, is not yet in sight, since the network expansion that energy transformation demands is costly. The expense is passed on by the network operators to the electricity customers. What are the implications of this development on the competition for customers? One key answer: Customer fluctuation continues to increase, as a look back over recent years reveals. The Federal Association of the Energy and Water Industry (BDEW) estimates that more than 44 percent of all household customers in Germany have changed their electricity supplier at least once since liberalization, and many of them several times. Here, digital channels provide fast access to new offers and provide comprehensive comparison options – and not only on prices. What matters as well is customer satisfaction, where the energy comes from, and the flexibility and transparency of the overall offer: How are prices calculated, can the customer benefit directly from reduced consumption, and can intelligent applications such as digital meter systems be integrated? One could also say: The topic of “energy” is becoming more emotional.
How energy startups score points
In this market new energy companies with digital business models have enormous opportunities: On the one hand, they are automating and digitizing their processes to such an extent that they can get by with a fraction of the cost-to-serve typical for the industry and so can realize very low energy tariffs. On the other hand, they score points with a fully digital and transparent offer: Using the app, which shows them their current consumption and current costs, users can easily report their meter reading, correct the budget billing or change their inventory data. The next step is to connect the app to a so-called smart meter. Customers can now run an ongoing analysis and manage consumption intelligently – for example, by charging their electric car only when electricity is cheap. The innovations open up a great range of money-saving methods and practical solutions.
Rethinking product management from scratch
Here the powercloud platform plays a strategic role. It enables many startups to implement the automated processes concerned, and at the same time ensures a much more flexible product creation: In just a few clicks users can design, fully automatically, a billable product and publish it ad hoc on the market – from commodity and non-commodity bundles to offers on marketing surplus energy, storage solutions, wallbox and conventional residual electricity tariffs. The entire product management is reimagined and consistently follows the agile concept. Nor do you need time-consuming IT projects to implement new functions and business models. Regulatory changes are provided free of charge.
The kinds of opportunities that emerge through this approach are revealed by a glance at exemplary startups, which offer their customers green energy and also bank on powercloud:
- Lition is a private trading marketplace whose goal is to network decentralized energy generators and consumers. On this platform, consumers select the solar or biogas system they want to source their energy from. A blockchain is used for trading.
- stromee acts as a smart home platform. The overarching goal is to minimize energy consumption. This means energy can be bought from stromee at the energy purchase price. The company earns revenues only on a fixed basic monthly fee – not from consumption.
- Yippie is a nationwide provider of sustainable electricity and gas with the vision of developing an ecosystem that is both digital and sustainable. And not static, but rather agile and dynamic.
- Ostrom is an independent energy provider focused on mobile digital channels – much like the N26 direct bank in the financial sector. A whole range of ways to save money and practical solutions open up for the customers.
- e.optimum offers household customers low wholesale prices – and highly transparently: The price of green energy is transferred without risk or margin surcharges. On top of that only a very low basic fee is levied.
- stadtenergie is the new digital brand of the DEW21 energy supplier from Dortmund. Their offer is focused on product bundles of electricity and gas as well as non-commodity hardware. Short project run-times and fully digital processes are the company’s trademark.
- Octopus Energy is an English supplier, which is fully reliant upon digital customer-access and attractive partnerships with other companies. This means, for example, that the customer will be offered a Germany-wide “Tesla energy tariff” in the near future.
Optimizing all business processes
Transparent tariffs, digital customer access and fully optimized processes – these are the conditions with which a wide range of energy startups are scoring points on the German market. Last but not least, powercloud ensures there are low barriers to entry in this regard: The company is ready to switch on the end-to-end solution after just a few weeks – from the first kick-off till “go live”. Afterwards, users receive many benefits such as free format changes, comprehensive automation, and simple user guidance. These arguments are convincing more and more start-ups and companies with a “digital mindset”, and the development is only just getting started: Barely a month passes without a new utility being founded, since the potential of the German energy market is huge. On top of that, there has been a general upsurge in digital channels over the course of the Corona crisis. Opaque tariffs and clumsy “analog” communication are becoming more and more of a disadvantage.