2024 Energy predictions: Rapid transformation, personalised AI propositions and a smart meter boom

2023 was a big year in energy – wholesale prices fell from their record highs, renewable energy generation has continued to grow at pace, and AI has been the word on everyone’s lips.

As we venture into 2024, here are my top three predictions of what will change in the energy industry this year:

Retailers will tackle transformation

This year, energy suppliers globally will confront crucial decisions on how best to transform their business for net zero, with those who fail to modernise fast enough, at risk of falling behind agile challengers. We saw this happen in the UK market and are now witnessing it in other parts of Europe and Australia.

According to EY, 94% of energy providers say their ability to move quickly is a challenge and 62% of customers have experienced a problem using their energy provider’s digital service. This year, retailers must ensure agility is built into the core of their technology platforms to enable innovation at speed – else high-value customers will vote with their feet as competitors rapidly launch increasingly targeted and tailored propositions.

There’s a phenomenal opportunity today for retailers to truly engage customers in their energy by creating a unified and easy-to-use experience that encompasses every device – from their EV to solar PV – and shows customers exactly how much they’re using, spending and saving, all in real time.

However, incumbent retailers can’t just bolt on these innovative offerings anymore. True transformation can only be unlocked once retailers take stock of their current digital infrastructure, strip back the hundreds of products and tariffs that are slowing them down and deploy the technologies that allow them to test and iterate as they scale.

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Energy is about to get a lot more personal thanks to AI

Customers will continue to tune into their energy use as bills are likely to climb once again this winter. High prices and engaged customers will prompt retailers to develop new propositions and personalise their offerings. Through AI tools, retailers will receive a more holistic view of the customer and what they need.

For example, establishing whether a customer has certain smart devices like an EV and solar panels. This can unlock solar matching – an AI technology that automatically charges an EV when there is excess energy available from a connected solar system. Solar charging is groundbreaking because it is essentially free, sustainable and produces zero carbon.

Through personalised recommendations, customers will feel more valued and in control of their energy use and costs.

Whilst energy costs remain top of mind for consumers, cost to serve remains top of mind for retailers in an environment where margins are still squeezed. This is where AI also plays a key role. Through deploying AI to support agents in serving customers, or even using AI to directly respond to customer queries; operational costs can be reduced, response times slashed and, if the AI is truly intelligent, customer satisfaction can increase. 

Getting back to basics – fixing the smart meter issue

Before retailers can think about real-time data and personalisation, we need higher smart meter penetration to gather these insights. Although not a novel tech, smart meters are absolutely critical to global sustainability and energy management. They play a vital role in managing the integration of distributed energy resources like solar panels and EVs.

In Europe, 13 of the 27 EU countries are moving along on their smart meter goals, however, 11 countries have barely started or don’t have any plans at all. In the UK, we’re also seeing challenges in the roll out with adoption rates at a stubborn 58% as of June 2023, below expectations. And with 11% of smart meters in Britain not working properly, it’s clear we need to get back to basics. I predict that smart meter penetration will exceed 70% in the UK next year as the industry doubles down on getting this foundational tech in place for our future energy system and as customers see the value of participating in smart meter-dependent demand response schemes like the National Grid’s Demand Flexibility Service.

As the energy industry braces for the challenges and opportunities that 2024 holds, rapid digital transformation, a boom in AI-driven personalisation, and smart meter advancements will take us a step closer to net zero.

About the Author
Melissa Gander has more than 15 years of experience in the energy industry. She became OVO Group Chief Operating Officer in 2019 and joined Kaluza in 2021 as Chief Operating Officer.