Ten predictions for prepaid energy in 2015

What’s in store in 2015 for energy prepayment? Prepaid Energy Hub sets out our pick of the top 10 trends to watch.

Prepaid energy trends to watch in 2015

Ten prepaid energy trends to watch in 2015 – Source: Prepaid Energy Hub

1. Onward march for prepaid-focused energy suppliers in competitive markets. Newly liberalising domestic supply markets and competitive markets transitioning to smart meters will be happy hunting grounds for alternative suppliers that focus on the prepayment segment. By combining the latest metering technology, smart IT and lean operations with competitive pricing and a good standard of customer service, prepayment specialists can grab market share and give pay-as-you-go energy services an attractive modern image. Europe and parts of the US have already spawned a number of successful prepaid-focused electricity suppliers and there will be no let-up in 2015. Expect to see some existing suppliers move to replicate their success in new territories, as well as the emergence of a few innovative new entrants.

2. Multi-channel communications for improved usage transparency and budgetary control. It’s no secret that prepayment services raise customers’ awareness of their consumption and help them both save energy and control their spend. Timely feedback and actionable information is king. By providing a wider range of information channels – including in-home displays, text messaging, web portals, smartphone apps – utilities can help their customers maximise the benefits of a prepaid arrangement. With smart metering, there’s a wealth of consumption data that utilities can mine to further empower customers to make smart choices about their energy behaviour. Online portals and mobile apps for accessing consumption data and managing smart meter based prepaid accounts are becoming more common and the trend towards a multi-channel communications approach for smart prepayment will continue apace during 2015.

3. More focus on consumer friendliness. Some markets like Northern Ireland have succeeded in increasing the take-up of prepaid electricity by making the service much more appealing to customers. Customer-friendly improvements include providing in-home displays so that consumption data and balance information are easily accessible, and giving friendly credit and emergency credit to mitigate the risk of unexpected disconnection (one of the most unpopular aspects of traditional prepayment services). Increasing payment channel flexibility by adding new methods, such as mobile payments, online top-ups using a debit or credit card, or automatic recharges, can also help improve the customer experience. Many modern prepayment services also allow customers to clear any outstanding debts through micro-instalments that are deducted with each top-up. In 2015, more utilities will incorporate at least some of these customer-friendly practices into their prepayment programmes, in response to regulatory requirements as well as to improve service delivery and customer satisfaction.

Emergency credit, debt management, cost transparency functionalities and non-disconnection times are becoming a must. Olaf Vieselmann, Product Marketing Manager, Orga Systems

4. Greater acceptance of pay-as-you-go as a lifestyle choice. To date, many smart meter based prepaid utility services have targeted consumers who struggle to pay their bills. In 2015 prepayment could start to find favour as a true consumer choice in some markets where smart meters are being rolled out, driven especially by young people’s familiarity with prepaid mobile and transport services. One place to watch will be the UK, where a handful of suppliers have begun marketing modern pay-as-you-go energy services based on smart meters. But any developments this year will be just the beginning of a much longer term trend towards a wider adoption of prepayment as a consumer choice.

Prepayment is an increasingly popular option for mobile communications and it is only a matter of time before this trend is felt in the energy market. Chris Beale, Director Electricity Metering Solutions, Itron

5. No universal approach to policy and regulation. Government policy and regulation exert a powerful influence over the evolution of energy prepayment at national and regional levels, with a diversity of approaches reflecting different local situations. To combat bill non-payment and meter tampering, many developing countries will continue to insist on prepaid electricity metering for any large-scale meter replacement programmes as well as for new connections. In markets transitioning to smart metering, the opportunities to offer smart pay-as-you-go services as a consumer choice will be variously spurred by the inclusion of strong mandates for prepayment in national smart metering programmes, or else dampened, either by regulatory opposition or simply by failings to make any specific provisions for smart prepayment.

In the US, the greatest uncertainty in 2015 will be around how readily the Public Utility Commissions of the States accept prepaid utilities. Jeff Severs, COO, Exceleron Software

6. Growing demand for ‘semi-smart’ metering solutions that minimise fraud. In developing countries, containing non-technical losses and preventing fraud will remain high on the agenda for many utilities. But despite experiencing significant levels of power theft and bill non-payment, many utilities will struggle to make a positive business case for smart metering. Instead, they will look for ‘semi-smart’ solutions that can integrate automatic meter reading with their existing prepayment systems and analytics to monitor consumption against the power supplied.

In developing markets there is a strong move towards collecting minimal data from the meter to prevent fraud. Chris Beale, Director Electricity Metering Solutions Marketing, Itron

7. Still no consensus on thick versus thin metering. The debate over whether ‘thin’ or ‘thick’ metering solutions are best for smart prepaid electricity will carry on rumbling this year. In the thin model, favoured in the US and the Republic of Ireland among others, the meters send readings back to centralised systems, which calculate prepaid balances based on the users’ tariff. Thick meters perform these calculations locally. While vendors of centralised billing and account management systems are reporting high levels of demand for their solutions, there is a drive from some meter manufacturers to move intelligence to the meter as the costs of providing processing power ‘at the edge’ come down. Each approach has its merits and in the near term there’ll continue to be no common direction. 

8. More partnerships to deliver pre-packaged end-to-end solutions. To reduce costs, improve return on investment and simplify implementation, utilities will seek out end-to-end prepaid energy solutions that pre-integrate everything from smart meters through to account management and customer care. This will require vendors to build strong partnership networks to develop solutions that are pilot-ready, as well as straightforward to implement and robust in the field.

9. Increased leveraging of mobile infrastructure to enhance prepaid energy services. More utilities will partner with mobile network operators to improve the delivery of their prepaid electricity services in developing countries. There is a growing appetite among mobile operators to pursue opportunities to offer value-added services for vertical markets including utilities, based on their near-pervasive coverage footprints and advanced IT platforms. Mobile vending solutions that allow energy customers to top up their balances from their mobile handsets and bulk messaging to help householders manage their energy usage and notify them of load shedding events will top the list of utilities’ requirements. Utilities will look for operator partners who can combine good network coverage, flexible IT systems and attractive pricing with a real understanding of the energy sector.

We expect to see combined offerings from telecommunication providers and utilities with innovative prepaid energy solutions for developing countries. Stefan Henss, Head of Vertical Markets, Redknee

10. Smart microgrids for off-grid rural communities on the rise. In developing countries 2015 will see more remote villages become connected to smart microgrids that combine local renewable generation with household smart prepayment meters. Villagers can purchase power units from a local reseller, who then transfers the credit by wireless transfer to the household meter. This business model using smart meters is taking off in India and holds great promise for extending access to electricity to off-grid communities and those with limited supply.