Green energy finance using energy insights

Jon Slowe is talking with an organisation from the financial sector. For a successful energy transition there will need to be big changes and investments in how energy is used, stored and generated in homes and buildings – and that will need high levels of customer engagement. Jon is joined by Petra Eussen from Rabobank in the Netherlands, Berend Olde Rikkert from energy insights provider NET2GRID, and LCP Delta expert David Trevithick.

Episode transcript

[00:00:04.040] - Jon

Hello and welcome to the episode. Loyal listeners to this podcast will know that I'm quite passionate about how customers are involved in the energy transition. For a successful transition, there will need to be big changes in investments in how energy is used, stored and generated, even in homes and buildings. And that's all going to need really high levels of customer engagement in energy. Now, today I'm talking with an organisation that's trying to drive this kind of engagement, but from outside of the traditional energy sector. Indeed, they're from the financial sector. Joining me today is Petra Eussen from Rabobank in the Netherlands, together with Berend Olde Rikkert from energy insights provider NET2GRID, and David Trevithick, our resident expert here at LCP Delta. Let's say hello to our guests. So, first of all, Petra. Hello, Petra.

[00:01:02.480] - Petra

Hi, Jon. Hi, Petra.

[00:01:05.230] - Jon

You're joining us from the Netherlands today. I'm sitting here in our Edinburgh office. It's minus six outside. How cold is it with you at the moment?

[00:01:15.460] - Petra

Minus six. That's a lot colder than here. It's freezing here as well, but I think it's minus one or so.

[00:01:20.940] - Jon

Minus one. Okay. So heating system is still working quite hard. We're talking about working with customers on their energy consumption. I don't really want to know what my energy consumption is today at home because it's going to be quite high. But can you tell us a bit about why Rabobank is starting to work with your customers around energy?

[00:01:47.280] - Petra

Yes, Rabobank is in the Netherlands. We are the one, the number one mortgage bank. I don't know, maybe listeners know this, but we have about 1 million mortgage customers and we find it very important that our households start living more sustainably. So we want to help them and engage them to make their home more sustainable. So that's why we're trying to develop products in this energy area.

[00:02:17.800] - Jon

How much of that Petra would you say is push from Rabobank in terms of Rabobank's motivations around sustainability? And how much is pull from your customers about you hearing your customers are really interested and want these types of insights and services?

[00:02:36.720] - Petra

Yeah, actually, that's becoming more and more from a financially healthy living perspective. We hear that lots of customers have difficulties paying their energy bills at the moment. So from that perspective, our customers are very interested in lowering their bills and ways to improve their energy usage in their homes. So from that perspective, we get more questions about it. But I think traditionally, it's not really a bank kind of area, so it's more push, I guess, than a pull from customers.

[00:03:14.220] - Jon

And we'll go into the detail a bit later in the podcast, but can you give our listeners a feel for how you're working with customers on their energy consumption, what sort of things you're doing or how you're helping them?

[00:03:27.760] - Petra

So we're doing a few things in our advisory channels. Of course we try to help them when thinking about making their home more sustainable. So we try to help them thinking along on how to plan home improvements in isolation or in solar panel instalments. So that's in our advisory channel when people come for their mortgage, also in the online field, we do it with the home scan. So we have a product where consumers can have a 3D scan of their home and there they can see what kind of home improvements would fit their homes and what energy label improvement they could make. And third and that's, I think what we're going to talk about today is our new product which is around energy consumption. So we want to help them lower their consumption and see how they can get this done by changing their behaviour and also doing changes to their home so that's giving them insight in their consumption.

[00:04:37.020] - Jon

Okay, and I guess the three of those are all linking together. We mentioned energy insights. Let's say hello to Berend now from Energy insights provider NET2GRID. Hello Berend.

[00:04:51.260] - Berend

Hello Jon, good to be here.

[00:04:53.610] - Jon

Thanks for joining. Now, you're not providing energy insights directly yourself, if I understand right. You're typically providing them through partners or enabling others to provide energy insights. Can you give us a feel for who your typical partners are? So what are your typical channels or partners to reach customers?

[00:05:18.800] - Berend

Yeah, that's an interesting question. I think from an historical perspective, these are mainly energy suppliers. So the main base of our customers are energy suppliers in Europe, in Australia and in the US. And they provide energy insights through an app usually, but they also use that same type of data to give the information to their call centre agents and help customers when they have any inquiries about their bill or use it to provide an offer. Personalised services, personalised offers to these customers. Then you can think of solar panels or a heat pump service or these kind of things.

[00:06:16.500] - Jon

You mentioned that's historically they've been your main customers, your main channels to market. I guess by using the word historically, you're seeing that change a bit.

[00:06:28.120] - Berend

Yes, and that's an interesting development, I think, for it's over a year now that we get more and more questions from other sectors. And banking is definitely one. And I think the case for a mortgage bank like Petra already showed is quite logical since making your home more energy efficient is one of the biggest challenges that we are facing in battling climate change. And I think banks can really play a very beneficial role in there by providing financial products, green loans to make your home more sustainable, make it part of a mortgage. So from that point of view, I think it's quite logical, but I must say there is interest. But I also do think that Rabo is a front runner in this respect in terms of where they are with this service at the moment.

[00:07:44.870] - Jon

Sure. Okay, David, what do you think about this? Just listening to Berend talk there. Energy retailers are a natural partner for engaging customers because that's who you buy your energy from. But making your home more efficient is not really an energy thing, it's a home, a building thing. And if you're bringing finance into that as well, again, that's not typically an energy thing, that's a bank thing, a mortgage provider thing. So what are you seeing, David, and what's your thoughts on who are the natural partners to work with customers on reducing their consumption, making their buildings more efficient?

[00:08:28.080] - David

That's an interesting question. I think no one's got a pure and free sort of licence to offer that role, but I think there's different types of organisations that can all play a part in terms of energy production. For instance, you can look at sort of governments and non-profits that are playing a role there and obviously you've got people with a commercial angle. I think you're right that energy retailers have historically had that role. It's perhaps the natural go to place for energy advice and for sort of home renovation perhaps, but as I say, they don't have necessarily the full licence and free licence to do that. It's generally acknowledged from many customers that energy retailers often make money from energy consumption. So therefore, sometimes when they are trying to offer energy saving advice and tools, that can be a mental block for some customers. So you could argue that banks and financial institutions can perhaps be seen as more neutral in this space. And of course, they've got long standing relationships with customers built up over many years and that's something they can leverage, as Berend saying, with the loans and tied into mortgages, for instance. But it's simply a service that energy retailers can't offer.

[00:09:50.940] - Jon

Well, Petra, let's come back to you because we're, I think, convincing ourselves that banks are actually in quite an interesting position here. You've described the three different ways in which you're working with customers. If I understand right, two you've been doing for a while. One is newer. What have you learned about working with customers on energy so far? Are you at the beginning of your journey? Have you sort of got some really good insights, some experiences, some things that have surprised you over the last while that you've been doing this?

[00:10:30.120] - Petra

What we've been seeing in the last few years is that awareness is rising. I think that is the case not only in the Netherlands, but I think in all of Europe. So especially when customers, when consumers are moving or when they're changing homes, that is often a very natural moment for households to think about sustainability or to making a home more sustainable. So that has already been for a longer time like that. So reaching out to customers that are moving and that are requesting a new mortgage that was already there, although we see that it's rising a lot now. The question of can we finance green improvements in our home? Especially now with the rising tariffs in the energy market. It has been a large rise on this request. But for the non movers, the people that are not aware or not always where energy was just always there, where it was more of a commodity, and where the energy tariffs weren't so high, it wasn't really a problem. We've seen now in the last year that it's really becoming more important. So many more households are facing trouble now to finance their bill at the end of the month.

[00:11:56.100] - Petra

Tariffs have become variable in the Netherlands for many people, which means that your energy bill end of year can turn out a lot higher than it was in the last few years. So we see a lot more requests for installing solar panels. The market of installation is completely full. We see a lot more instalments. And when that is full, then people start saving. Because if you cannot improve your home, you need to do it by saving energy.

[00:12:29.740] - Jon

So let's move on to energy insights. One question first. Just before that you talked about your advisory work, your home scan work. If a customer identifies an opportunity through that to improve their installation or put on solar panels, will you finance that as Rabobank? And will you work with customers to do that? Will you contract with customers or do you not get further involved at that point?

[00:12:57.300] - Petra

Yes, we will. It's not our main goal of all these products. Our goal is really to make our mortgage portfolio more sustainable. So really to help customers make their home sustainable when necessary, we can also provide financing. It's not always the best interest to do it through the mortgage. Sometimes using your savings is a lot more interesting for a customer. And then we will advise that for financing. Of course, that's our main activity, reason for being there.

[00:13:34.660] - Petra

But for, let's say, saving energy in that area. For us, it's very important that customers have a payable lifestyle, that they have a financial healthy way of living. And that involves knowing what you spend also in energy and knowing what you spend is normal.

[00:14:00.460] - Jon

So how does it actually work then? Because you're not billing customers for energy, clearly. And Berend, jump in here as and when. So how do your customers at Rabobank get insight into their energy consumption given you're not sending them a bill? Do you develop an app? Do you build it into your app? How do you communicate this to them? How do the customers interact and get this insight?

[00:14:27.780] - Petra

We have it built in in our banking environment. So that's in the banking app as well as in our online banking platform. So if you log into your banking account, you can see the energy insight and to get it available, you need to be onboarded in our service. So you have to explicitly give us consent for us to get your data. And this data we fetch with the help of NET2GRID. So NET2GRID provides a data pipeline for us to the smart metres that are in the homes of the users of the customers in the Netherlands. And this is how we retrieve the data and present it to the customer in the app. But not only do we present an insight, the cool thing that's I think where Berend can come in is that we show it in a disaggregated way so we can also show them what it was spent on. Okay, that is really cool.

[00:15:29.060] - Berend

Yes. So what we’ve shown in the app also is that this is kind of new for customers and also new for banking customers. So if I compare reactions of customers with the rival service, with energy customers, then it is definitely a very much added value in the banking app also, because it's perceived as something new, I think. Whereas with an energy provider, it's more like, hey, you expect your energy provider to give you some insights in terms of your consumption?

[00:16:13.920] - Jon

Just tell us tell us a bit more about that added value. So in what way do you see the banking customers perceiving it as added value? Is it how often they're engaging with it, or are you seeing that from other metrics?

[00:16:29.010] - Berend

Yeah, so people are really returning to the app, so they're using the app multiple times per week, and also what we see is the qualitative reactions to it. So people really say, hey, this gives me a very good view on where I spent my energy. So it's also, from a contract perspective, it is very much appreciated. I think what is good to note here also is that it becomes possible because we can have access to the data through a central data hub in the Netherlands where you can actually obtain that data as long as you can provide a customer consent.

[00:17:29.980] - Jon

Sure.

[00:17:30.570] - Berend

And there is a growing number of countries where that is the case.

[00:17:38.960] - Jon

It opens up a lot more innovation, doesn't it?

[00:17:42.080] - Berend

Yeah, it definitely does. It definitely does.

[00:17:45.600] - Petra

And I think in an era of distribution of smart metres is really high. So many of our homes have these smart meters for electricity and for gas, and they provide data every day, or even multiple times a day, so that we can interpret this data really accurate and really daily into terms of was it cooking, was it showering, was it heating? And users really get an insight not only on the totals of what they used today, but also what they used it on. So they are really valuing this as a cooker in my kitchen, is it really so much energy using yet? It's not just like you use so much energy today, but it was the cooker that was on, or it was the second refrigerator which was on and that valued a lot.

[00:18:41.270] - Jon

How long have you been providing energy insights Petra is this very new or for a while or in pilot phase?

[00:18:48.740] - Petra

I think we are doing it for a year now. First half year was with friends and family pilot, as how we call it, so it was with colleagues to really get this data right and to get it working right. And we've been in a pilot with customers now for a quarter, three months, where we are trying to get it right in all kinds of households and if a consumer moves, we have to do something. We are trying to look out into all the edge cases. So sort of for a year now, we're doing it with live production data.

[00:19:28.480] - Jon

How are your expectations around the level of engagement? How often people are looking at this? Did you have expectations at the beginning or did you learn from Berend? Or has it been more than you thought or less than you thought? Or tell us a bit about that.

[00:19:46.190] - Petra

Yeah, we have already experienced with an insight that we provide on the household spendings, so we know a bit on how that is used in our banking app. But I must say that this insight now on energy is higher used than that. And that is, I think, also because I think the pilot group, which is very engaged to see how much engaged next users will be and also helped by the economy, the tariffs are rising so hard. But I think what we see is that a quarter of users visits at least once a week, so that's a lot, almost all visits once a month come back. So we have a lot of usage that we see in the group. But we did have in the beginning, of course, also troubles. It was a pilot, so it was almost amazing sometimes how often people came back providing us with help also on improving. So it's really nice.

[00:20:53.600] - Jon

That's what pilots are for, I guess.

[00:20:57.680] - Petra

Yeah. But you notice also in the customer feedback that it's so very spot on now in timing wise, that because of the market changes and the energy problems, it's absolutely spot on.

[00:21:12.130] - Jon

Yeah.

[00:21:15.300] - Berend

To build on that a little bit, I think what's really good is that customers really find it a logical service also to be provided by Rabobank. Right? There's no questions there that they say, if I want energy insights, I go to my energy provider. That's definitely not the case. It's a service that's been sought after. I think that in the current time that we're in, it really is a service with potential, I think.

[00:21:57.540] - Jon

David, I'm interested in your thoughts on engagement with apps. You look at this very closely across many tens of European energy retailers and who has an app, what's in their app, what level of energy insights they're providing? It's one thing to have an app with these insights, it's another thing to have the engagement with the app. And what are your thoughts hearing Petra and Berend talk about the level of engagement that they're getting in, admittedly with a pilot at the moment. But those high levels of engagement, how does that compare to what you're seeing with energy retailers?

[00:22:39.440] - David

We're seeing a huge increase in engagements across the board in Europe this year with the energy crisis sort of driving that. There's just huge demand really to understand your energy, to monitor it and manage that. So we're seeing that replicated in terms of the frequency of use of apps and web portals that sort of host this information and sort of depth and breadth of content or functionality that's being used for. So this is no surprise to me to hear this. We are hearing this time and again in our conversations. It's been a real pivotal year in that sense. Obviously it's a pilot, they're going to be some sort of early adopters in that mix and sometimes as the initial interest sort of wanes, they'll be in the sort of natural plateau, perhaps slightly lower than the initial interest value. But I see no reason why that couldn't sort of continue developing over time. Once you've got these customer consents, you've got that first stage done, that's obviously a critical moment in a customer journey. Once you've got that, it's a question of then creating the drivers to attain that engagement and a lot of things to do to sort of move consumers along their own personal energy transitions and obviously that's where greater knowledge you get and the sort of virtuous circle of better insights, better actions on the back of that can kick in.

[00:24:13.420] - Jon

Petra, what's your I'm looking forward now? I imagine you'll work through the pilot phase and then roll it out to your customer base. Are there particular challenges that you see ahead apart from the practicalities involved in all of that? Is anything keeping you awake at night regarding this or is anything particularly exciting you about what you want to do in the next year?

[00:24:38.840] - Petra

Yeah, keeping awake? I don't think so. The energy market is a complex new market for a bank, so it is innovative and that is also innovative for a bank to start in such a new domain. So yeah, that's really exciting actually. It's exciting also. It has been exciting to make such an innovative feature in the banking app in our core, you'd say. And I think launching it to a broader customer base that also brings new exciting responsibilities for this feature. Right. It has to comply to everything that we have to comply to as a bank and that is new for such a feature in the energy domain. So I think that's going to be an interesting new journey this year. And also, I think this engagement, like David already says, it's so important to keep them engaged. So we need to find features where we can keep them on board and where the government is now talking about the ceiling for gas and electricity usage, where within the ceiling, you don't pay. The higher tariff will provide users with a ceiling viewer. Am I on my ceiling or not? When these kind of rules change, we have to come up with new features so that we can keep users engaged and help them through this energy consumption in the coming year.

[00:26:23.320] - Jon

Do you charge for the service or is this just part of what you provide all your customers or do you have any plans on that?

[00:26:30.690] - Petra

Yeah, it's free of charge for all customers.

[00:26:35.900] - Jon

And I can see from a bank's perspective your attitude to risk. I guess banks and risk don't go together, or at least they shouldn't think back to the last financial crisis. That must make you quite careful in how you're doing this, but does it slow you down or do you think you can be quite entrepreneurial and innovative and quick?

[00:27:02.820] - Petra

Yeah, I think we can use our knowledge about this, about how to handle risk. As a bank, we know so well that you cannot present something to a customer when it's not completely right. So we will only show data which is right. So this trust part of the data and distrust part of a service is something that customers are used of us. So I think that can work in our advantage.

[00:27:34.310] - Jon

Yeah, okay, it's part of your brand, you have the trust.

[00:27:39.430] - Petra

Yeah, but also you have to always comply. So you have to always be very thoughtful of how we handle data, how we handle pipelines, how we deal with security, how we deal with all these kind of things. And that's interesting, but I think we are as a bank, you're used to working like that.

[00:27:58.870] - Jon

And you personally, Petra, do you have an energy background or a financial background out of interest?

[00:28:06.540] - Petra

Physics actually. So a bit of both.

[00:28:13.580] - Jon

Well, getting to that time of the podcast where we bring out the talking new energy crystal ball. And for the three of you, I'd like to turn the door to 2030 this week with the same broad question, but I'm going to tailor that slightly for each of you. So, Petra, I'd like you to describe in 2030 how Rabobank will be working with your customers on energy and how widespread that will be across your customer base. Berend, I'd like to ask you what proportion of your customers so your channel partners that you're providing energy insights to, what proportion of those will be traditional energy sector companies, and what proportion will be from outside of the energy sector? And David, a similar question to you from a broader energy insights perspective, what proportion from traditional energy sector and what proportion from outwith? So, looking at 2030, let's start with you, Petra, and then Berend and David.

[00:29:22.480] - Petra

Yes, what I think that will happen is that the energy market will become much more distributed, like in that, you see already that consumers become producers and roles change in there. And I think that consumers will be more aware of their role and also on their role in this energy exchange system. And I think as a bank we can play a role in this because they will need a tool that will manage their energy accounts and their balance, their energy balance, and that needs to be a tool that ensures trust and security and risk and independence also, actually. So I think in 2030, I think Rabobank will be there, we'll play a role in there.

[00:30:13.280] - Jon

So it's a bit like a financial product, in a way. It's another financial product. You could think of it that way.

[00:30:17.930] - Petra

I think it could be, yeah. But a lot of it, is unsure, on this market.

[00:30:25.300] - Jon

Okay. Thanks very much, Berend. Who will your partners be? Where will your channels be in 2030?

[00:30:34.280] - Berend

Yeah, I think that also for part is depending on how energy suppliers will manage that change themselves as well. So it means, I think, that energy companies will need to move much more to energy services and play a role in helping customers to reduce their energy consumption and provide services that help them do that, but also help them to sell renewables and stuff like that. And for that, I think data is really very necessary. So I do think that we have an important role as NET2GRID to play in that market. That being said, I think you already see the tables are shifting, so there is a great role to play for banks, as we have discussed already, but we see also interest from other sectors, so electronics retailers that say, hey, but if we provide the appliance, why don't we provide also the energy? And we can help them to choose the most energy efficient appliances. So I think that's a very valid use case. We see also manufacturers of heat pumps or boilers that are really looking into self consumption type of use cases and using excess solar power to run ancillary processes or do some load shifting with their appliance.

[00:32:26.620] - Berend

So I think it will be much more diverse and we will have a bigger proportion of our customers will really be outside of the energy sector, I would say.

[00:32:43.300] - Jon

Okay, so becoming more fragmented, more diverse. Hard to say exactly who's going to do the best job over this, but certainly it will be diverse. David, how about you?

[00:32:57.300] - David

Honestly, it's fairly similar actually to Berend. So thinking here we focus on this conversation on banks, but that's not the only opportunity. You can use personalised smart meter data in lots of other sectors, insurance and social care, or two others, for instance. But that said, I still see energy companies remaining the biggest slice of the pie here, because the future largely depends on them being able to shift from perhaps a commodity sell through to energy services. So in 2030, I'd say still they would be the bulk of the client base, but increasingly they'll have a smaller share of that pie, I think. And I think banks and finance sector could take up a bigger proportion, particularly actually, perhaps even from 2030. So green finance is obviously a key enabler to net zero target, so we will see that continuing, I think, beyond 2030 as well.

[00:33:58.440] - Jon

Yeah, that's a good point. David I think the link between the amount of opportunity to invest in heat pumps or solar panels or batteries or vehicle to grid chargers in the future. Some customers, as you said earlier, Petra, will have the money for that from their savings, but many customers won't and will need finance. So there's lots of different angles around who can support customers in the best way and lots of different ways in which customers need support. So only time will tell.

[00:34:32.500] - Petra

And I think also, all parties in this area need to help in this transition. It's one party. It's a huge effort that we have to take.

[00:34:44.200] - Jon

That's why Petra, I think it's so exciting to see what you're doing at Rabobank and the ways in which you're working with the three different services that you described. So I think the market is still discovering how to best work with customers who can do that best. And we'll need everything we can get.

[00:35:09.120] - Petra

Yeah, exactly. Yeah.

[00:35:11.360] - Jon

Well, Petra, thanks so much for sharing your time and good luck with rolling out the pilot to your customer base.

[00:35:19.220] - Petra

Yeah, welcome.

[00:35:21.860] - Jon

Berend. Thanks also for your time and good luck in your work with Rabobank and all the other partners that you're working with to help them engage customers.

[00:35:31.960] - Berend

Thank you, Jon. It was a pleasure.

[00:35:33.940] - Jon

And David, thanks as always for your expert opinion and contribution to the discussion.

[00:35:40.930] - Berend

Thank you.

[00:35:44.040] - Jon

And last but not least, thanks to everyone for listening. We hope you found that interesting. I certainly learned a lot today and added to my passion for engaging customers and supporting customers through the energy transition. Look forward to welcoming you back to the next episode next week. Thanks and goodbye.