According to James and Alain, large suppliers will be focusing on cost reduction to remain competitive in 2018. Despite seeing a drop in energy prices by big suppliers in 2017, they cannot keep up with the competitive prices of new entrants. We will see a greater reliance on outsourcing to increase cost flexibility and perhaps even more M&A activity to counteract this.
Both think the gap in customer service between start-ups and incumbent suppliers will increase over the next year. The Utilities sector has spent a lot of effort over the past few years to improve their customer experience and yet they are still viewed as the worst, compared with other sectors. This has meant that they have lost customer trust and are losing out to the new entrants who are more agile. Alain believes the only strategy large suppliers have to combat this trend is to quickly digitally transform their operating model next year, or the gap will become too large to close.
Finally, they believe 2018 will be the year that we will start to see large corporations prepare to leave the Grid. The price of alternative energy and storage has decreased significantly faster than expected, which has led to companies, such as Microsoft and Google, to try to generate their own energy. This will cause a ripple effect, with smaller companies watching what the bigger players are doing and will attempt to emulate as soon as the cost of renewables decreases enough to be competitive.
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