In 2015 and 2016, when the Paris Agreement was put in place to limit global warming to 1.5 degrees Celsius, companies and brands were slow to react. This despite a 5-year cycle of increasingly ambitious climate action, as directed by the nationally determined contributions (NDCs) countries had to submit.

Since 2015 a perfect storm has formed. Finding an answer to the dramatic climate changes has become imperative, while at the same time mastering the necessary energy transition has become one of the most pressing topics and a threat to industry and society — even during the Covid pandemic.

Energy companies have been challenged by various stakeholders, and with Greta Thunberg and the Fridays for Future protests, the topics of climate change and the need to decarbonize have gained broad awareness not only with the general population, by also among politicians and policy makers.

Short term importance: From green and sustainable energy to diversification and independence

While the question of how to maintain affordability during the transition to clean and renewable energy remains, there is the more pressing issue of how to achieve independence from Russian gas, oil, and coal as quickly as possible.

Security of supply has changed in its meaning. Wondering if windmills and solar panels might be enough to deliver energy for a few days or weeks with no sun and wind, has changed into a worry about getting enough gas to even keep the lights on during the next winter.

Vivaldi recently conducted a representative study among the general population in several European countries with over 3000 participants, revealing an inconvenient truth: 2/3 of Germans see the energy transition as an important topic for society, but half of the population think that progress comes too slowly.

When the survey was conducted before the start of the Russian war against Ukraine, high energy prices were still far beyond the levels we see now, as countries are starting to rethink Russian gas and oil imports or put bans in place.

Even during pre-war price spikes, 84% of the German general population were already worried about prices, and 70% saw the dependency on imports of the various energy sources as a key concern.

While countries like Germany and France were clearly ambivalent regarding the EU taxonomy discussion on nuclear and natural gas, the need and wish for sanctions against Russia has reignited possible prolongation of nuclear and coal usage – even in Germany – to potentially end Russian natural gas deliveries. Reducing import dependency has shifted from natural gas to LNG, thus from Russia to Qatar and the US. Flexibility and diversification have become key topics to overcome.

Sustainability is here to stay long term – but increasingly becoming a commodity brand topic

Energy companies and energy intense industries are expected to take responsibility for the energy transition, yet they are clearly falling behind. 17 Sustainable Development Goals (SDG) have been laid out by the United Nations, with sustainability meant to be a focus for many brands. However, the general population — voters who can impact regulatory decisions — are not satisfied with energy companies’ impact on driving the energy transition. More than 70% of those in Germany see energy companies as responsible for this transition. But only one third agree that energy companies are fulfilling their responsibilities. In contrast to other countries, energy companies in Germany are lagging further behind the expectations of their citizens.

This is not a challenge exclusive to the energy industry. Other energy intense industries are facing the same challenges with high expectations from general population. In addition to this, there is pressure from capital markets partners seeking clean investment in line with the rising ESG expectations of investors. While pressure has been high to achieve the SDG target, a potential differentiation along sustainability lines has evaporated. No longer is sustainability a nice-to-have additional feature, but an expectation. Sustainability has become a central topic for many brands, and over time, will be a commodity itself.

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However, given the terrible war in Europe and its implications on the international energy market, energy is now a high involvement topic. Consumers are willing to rethink their energy supply and their individual setup. The pressing questions are complex and costly: Is my next new car an electric vehicle? Where do I get a charging point and what does it cost? Should I get solar panels on my roof and a battery in the garage? Is gas still a reliable source of energy for my company? What is the most efficient heating system? These are all complex buying decisions that are far from being low involvement. 

These buying decisions also sit under an even more complex layer of socio-economic questions: How dependent are we from energy imports? Should we aim for more energy autarky? How can people make their businesses more sustainable? Even decisions made long ago are up for discussion again. For instance, as recent research shows, 70% of Germans now support extending the operating lives of nuclear power plants. 

Neither energy consumers nor energy suppliers can answer these pressing questions on their own, but energy suppliers must play an active role. According to Vivaldi’s research**, even weeks before the war in Ukraine consumers expected energy companies to play a proactive role in the transition towards new energy solutions. 

To meet these consumer expectations, energy suppliers must get active in two areas: First, they must proactively start a dialogue about the most pressing questions with their customers. This can include regular consumer panels across regions and market segments, social listening approaches, or a consumer advisory board that discusses with management. And second, they must develop new and innovative solutions and services. For example, the leasing of solar panels, heating as a service, or bundles around smart energy management. Both areas must be addressed simultaneously. But the good news: these topics are closely interrelated and can support each other. Gaining new insights from customers through focused research can serve as input into the innovation process, and newly developed services will in turn stimulate new conversations. 

There are massive challenges for the energy industry, but currently, the window of opportunity has never been open wider. Major players of the industry have clearly understood the challenge. E.ON’s latest campaign states: “The time for action is now,” and presents a cross-disciplinary initiative of scientists, consumers, analysts, and operations managers, thus stimulating new conversations. 

The field for innovations is broad. Companies should consider opening investments in renewable energy and related ventures as does the Swiss investment firm smartenergy. German company BayWa r.e. encourages its partners to rethink energy for good: “How it is produced, stored, and can be best used … is essential to the future of our planet.” They come with impressive references for how they support businesses, regions, and even whole countries to cut CO2 emissions and to get energy transformation going. Innovative players from other industries are also pushing into the energy market: Tesla offers solar roofs to produce clean energy, electric cars, and an app to control everything in one place. Smart home technology is being developed by IKEA, with its IKEA Home smart App. 

Energy companies must step up and connect more deeply with customers. Developing reliable and flexible products and services, including hardware, software, and tariffs, will be a step in the right direction. Creativity and innovation will be the tools to keep customers happy, to manage energy transformation, and to develop future-proof business models. 

* Source: Accenture New Energy Consumer research, 2017 

** Vivaldi conducted a representative study among the general population in several European countries with over 3,000 participants, conducted Q1 2022. 

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