Back to basics: The case for ‘boring’ solutions in the energy transition

The energy transition has triggered profound changes in Europe’s energy retail sector. As the business models of energy retailers evolve and disruptors introduce new approaches, there has been a strong push towards innovation, automation, dynamic tariffs and flexibility-based solutions.

These innovations undoubtedly help accelerate electrification. However, for the energy transition to be truly inclusive, we must also prioritise the so-called "boring" essentials: good customer service, insurance, warranties and consumer protection. These fundamental services are just as vital in shaping a successful energy transition as cutting-edge technological solutions.

Energy retail is hotter than ever

Two years ago, we predicted that the energy crisis and the push for decarbonisation would transform Europe’s energy retail market. The traditional energy retail model, where retailers simply sold kilowatt-hours (kWh) to meter points, has become increasingly obsolete because:

1. It conflicts with policy goals aimed at accelerating decarbonisation.
2. It undermines customer trust, which has not fully recovered from the energy crisis.
3. It places traditional incumbents at a disadvantage compared to disruptive energy companies gaining market share.
4. It delivers razor-thin profit margins. Between 2017 and 2023, the average gross profit margin for ten major incumbents was just 2.5%.

To remain competitive, most energy retailers are shifting from volume-based commodity sales toward asset- and service-based models, refocusing on customers to engage, empower and collaborate with them. In particular, the past two years have seen major growth in:

• Smarter tariffs.

• Integrated bundles and one-stop-shop services.
• Appliance and whole-home optimisation linked to tariffs.
• New ways to monetise residential flexibility.

Every major player is now competing in this space, both disruptors and traditional retailers. In fact, some incumbents have gone so far as to adopt their competitor’s operational model. The strategic risk of E.ON and EDF Energy choosing Octopus Energy’s Kraken platform as their IT service provider speaks volumes.

But one of the biggest market shifts isn’t from retailers, it’s from technology providers entering the retail space. Companies like 1KOMMA5°, tado°, Enpal and Aira are driving a major shift in energy retail by directly integrating tariffs into their offerings. By enabling these companies to create fully integrated propositions, this approach enhances customer value and optimises energy use in a way that traditional models cannot.

For these companies, the hassle of obtaining a supplier license (or partnering with one) is worth it, because controlling the entire customer journey, from installation to optimisation, is far more valuable than simply selling energy. At its core, this isn’t just a battle for retail dominance, it’s a battle for asset control, as the potential for monetising residential flexibility grows.

Who benefits?

The rapid shift toward integrated, smart energy solutions has clear advantages. Companies like 1KOMMA5°, Enpal and Aira simplify the customer journey, removing barriers to electrification through financing, automation and bundled services.

But these solutions aren’t accessible to everyone. Most require customers to:

• Purchase at least one electrification appliance (solar, storage, EV charger or heat pump).
• And/or already own compatible technology.
• Invest in oversized solar or battery systems to achieve "zero bills" (raising upfront costs).
• Give up control of their appliances.
• Accept risks, such as price fluctuations in dynamic tariffs or potential wear-and-tear from optimisation.

Many households (particularly lower-income and risk-averse customers) are left out. This approach risks alienating key groups:

• Early adopters who find that their existing appliances aren’t compatible with newer solutions.
• Vulnerable households and apartment dwellers, who are often underserved while wealthier customers reap the benefits.
• Customers who prefer incremental adoption, rather than an all-or-nothing approach to smart energy.

Unsurprisingly, the energy transition has largely catered to affluent, tech-savvy homeowners.

The wealthiest are more likely to own at least one electrification technology (solar, storage, a heat pump or an EV charger) and significantly more likely to own multiple.

Wealthier consumers are also twice as likely to be on a dynamic tariff, while lower-income households (most concerningly) are twice as likely to be unaware of what tariff they’re on.

Disruptive energy companies may be able to focus on niche "energy geek" segments, but traditional retailers must serve a broader customer base to make the energy transition mainstream.

Why ‘boring’ solutions matter

For most households, the journey toward smarter energy happens gradually. Some will never adopt low-carbon tech. Others will buy a single appliance but refuse to give up control.

Yet, today’s energy market is focused on sophisticated, bundled solutions, which come with drawbacks:

1. They demand a major leap from consumers, often locking them into specific providers.
2. They assume customers are ready for full automation, when many prefer incremental changes.

To bring new energy to the mainstream, we need more than innovation, we need customer trust, protection and accessibility. That means:

• Providing accurate and transparent bills to continue rebuilding the trust lost during the energy crisis.
• Better customer service to support customers at all stages of their journey.
• Protection of vulnerable customers to ensure no one is left behind.
• Insurance and warranties to reduce risk.
• Clearer tariff structures that don’t require advanced knowledge to understand.
• Customisable options for consumers who want to engage at their own pace.

Innovation will always play a key role in the energy transition. But let’s not forget that the simplest, most ‘boring’ solutions (the ones reminiscent of ‘old’ energy) are just as crucial to make new energy accessible to all.