Gareth Morrell has been talking to scientists, engineers and industry experts about whether there are lessons from other industries that the energy supply sector needs to learn fast.

What does the future of the energy supply industry look like? For many it is hard to look beyond the current model of producing energy in large power plants or charging for metered energy use. But emerging trends are changing the industry with potentially fundamental implications for the prevailing business model. Non-traditional players such as Robin Hood Energy, owned by Nottingham City Council, are offering much the same services as traditional suppliers, and microgeneration is slowly cutting into suppliers’ market share. Technology improvements and falling costs will also make the value of simply producing and selling energy to consumers by the kilowatt-hour decline over the longer term.

Trying to make a living on top of a shrinking sandcastle may not be the best strategy for energy suppliers over the long term. While energy can be a profitable industry, its situation could be likened to telecoms in the 1990s, where charging for texts and calls was a major source of revenue. Companies had to adapt new models with package deals and charging for different services such as data.

The future of energy in the UK will ultimately focus more on microgeneration, energy-saving hardware, service packages covering a wider range of energy needs, and data analysis and consultation. The successful companies of the future will be good at one or all of these areas. The current monoliths are likely to either break up or consist of different parts: legacy (fossil fuels); near future (greener energy); and distant future (service or data analysis and consultancy). Smart players will see the first two parts, visionaries the last segment.

So what to do if you are a traditional energy company? Well, there is still a market to aim for but it will be centred on a mix of service models that include energy supply, installation of microgeneration, connection to the grid, energy efficiency, optimisation and maintenance. From generating and supplying energy, the market of the future will sell and install energy technology, connect it effectively to the grid and other potential customers, top up energy during periods of high demand, optimise self-generation and keep the system working well for the customer.

In a strange twist of fate, there may be players who benefit from the very fact that they are currently trying to catch up. Drax, the FTSE-listed owner of the UK’s largest power plant, is shifting from coal, which the government wants off the grid by 2025, towards greener energy and direct supply to businesses. More interesting still is the company’s move into consultancy on energy saving. The irony may be that those who have the most evolving to do due to changing priorities benefit from the experiences and change management processes they have to put in place when further radical adjustment is needed because they may be more confident in taking risks.

Energy companies are well resourced today but leaner times may lie ahead. The newspaper industry had large profits in the 1980s and 1990s but many failed to invest or see new models of mass communication emerging online. That is something the energy sector would do well to remember.

One thing to expect, if incumbents are slow to adapt, is that new, innovative players will enter the market. New entrants into a market can be extremely difficult to predict. New York Times technology columnist David Pogue said in 2006: “Everyone’s always asking me when Apple will come out with a cell phone. My answer is, ‘Probably never.”’ With hindsight we can see that Apple’s design and desirability, as well as its hardware and software, made it ideally placed to capture this market.

So who is the equivalent of Apple in the energy sector? It may even turn out to be Apple, which has a habit of dominating a technology from a standing start. But Google appears to be most interested and best placed to enter the energy market, particularly on the data side. Looking at today’s market, the easy way to predict who will still be around and thriving in 20 years is to identify those who understand and handle data and service well and are willing to make bold moves that may not make immediate financial sense.

Gareth Morrell, director of the Insights and Intelligence Practice, Madano