Lessons from Sweden’s customer-savvy electricity retailers.
Despite the absolute necessity of energy in our day-to-day lives, electric utilities in the US have never had a particularly intimate relationship with their customers.
Those customers have been largely okay with this. So long as energy was relatively cheap (trending below inflation since 1979 and until recently), service appointments were few and far between, and service was reliable, consumers had little reason to engage at all. I often hear utility execs say something to the effect of: “our customers don’t want to think about us.”
That may have been true when rates were low, infrastructure was stable, and nobody was asking customers to do much of anything. That is no longer the case. Energy demand is soaring, a problem made worse by the rapid expansion of data centers. Rates are increasing, and customers aren’t happy about it. One in six Americans has missed an energy payment. RTOs are taking heat for not adding transmission and generation more quickly, and this is all likely to get worse before it gets better.
Suddenly, a lot of customers are going to start looking at their electricity bills much more closely, and enterprising utilities should have a plan to offer them solutions. What exactly these solutions entail is worth a post of its own, and utilities will need to combine efficiency programs, new tariff structures, and demand response and flexibility programs to stay ahead of the coming wave.
But for now, let’s focus on customers with DERs.
Decentralized energy resources (DERs) refer to devices like smart thermostats, EVs, solar, and batteries, each of which has grown more and more prevalent in recent years. While some can cause issues for the grid if not properly managed, all are tremendous assets for grid operators if utilities can convince customers to play ball.
Doing so will require US utilities to rethink customer engagement entirely, re-imagining the customer experience from the ground-up. Or they could just look to Sweden.
Sweden: The Land of Power Users
First, let’s recap some important background on the Swedish electricity market:
- Residential energy prices in Sweden are generally higher (about 27%) than those in the US, though this can vary significantly from place-to-place.
- Swedes have adopted certain DERs like EVs and heat pumps much more quickly than Americans. Over 60% of new vehicle registrations have batteries, and only Norway and Finland have adopted heat pumps more quickly.
- Generation tends to be more intermittent, with ~22% of electricity generation coming from solar and wind. Energy is cheaper when generation is higher, and retailers penalize energy usage outside of these periods with demand charges based on the peak energy demand of the household.
- While most US utilities are vertically-integrated, Sweden’s energy market is deregulated, which means electricity retailers are constantly duking it out for customers. They compete on price, reliability, and features that allow for better management of energy consumption.
Put all this together, and you have a customer with a strong incentive to manage their devices’ energy draw, and who can shop among retailers that allow them to do so. No surprise then that the typical Swedish customer is much more discerning of the utility experience (and energy-aware) than their American counterpart.
That said, these aren’t companies necessarily looking to boost daily engagement. Rather, they want the experience to be as seamless as possible when users do have occasion to do so. Key elements include:
- Frictionless UX: Enrollment in flexibility programs is quick (ideally 2 minutes or less). Controls are intuitive. Configuring exceptions like vacation is easy.
- Clear economics: Value is quantified and visualized. How much did I save on my bill? What incentives did I earn? What could I have done to earn or save more?
- Comfort and trust: Customers provide only what flexibility won’t affect their day-to-day, and maintain the ability to claw it back if need be. This makes it much easier to trust the utility early on, and before long it’s a non-issue.
The most successful Swedish players nail it on all three counts, and end up treating their customers more like partners than piggy banks.
US utilities can do the same. Some low-hanging fruit can be delivered without much fuss, while other improvements will require some fundamental changes to the regulatory environment.
Back to the U.S.
So, what should utilities be doing right now? They should be developing an approach that will build trust with DER owners and make it a no-brainer for them to bring their devices onto the grid. We recommend three key shifts:
1. Surface market signals
Easier said than done, but the simple truth is that if customers are not exposed to the real cost of energy, you’re stuck relying on goodwill. The need for even basic market signals is well-understood at this point, yet less than 10% of customers were enrolled in time-of-use rates as of 2022.
Regulators have a big role to play here. Public utility commissions should be facilitating the adoption of next-gen tariffs, and giving utilities a wider berth to test rates that could surface grid signals in ways that customers can act on. What form these take can (and should) vary, but prioritize learning what structures strike the right balance of impact and administrative simplicity.
The alternative is to keep consumers in the dark, but this is a losing strategy. They simply can’t be insulated from these costs over the long-term, and utilities bringing their customers to the table now are the ones learning how best to handle this before the problem gets out of hand.
2. Make it an economic no-brainer
The best Swedish retailers use tools like Emulate to show customers exactly what they earned or saved through optimization. That transparency makes it abundantly clear that participation means money in their pocket, and creates an ongoing feedback loop that keeps customers engaged.
But like I said, customers in the US aren’t typically exposed to the same market signals. Until they are, utilities should use simple upfront and/or recurring incentives. Start simple, but start strong, and be prepared to pay a premium to rope in early adopters. Once you have a better understanding of the value these assets deliver, you can decide how best to share the wealth.
The early days of any new program are about learning, and if incentives aren’t attractive enough to get customers in the door, you won’t be learning much. Treat participation as a value exchange, not a favor.
3. Create frictionless ways to engage
Even the best-designed tariffs and programs fall flat if the user experience is clunky.
This is where platforms like ours shine – we integrate directly into customer-facing solutions to make enrollment, customization, and opt-out dead simple. We embed our technology into interfaces customers are already familiar with so they can learn about programs, enroll devices, and indicate how much flexibility they want to make available to their utility.
Outside of the occasional robo-call to turn down their thermostat, customers haven’t played much of a part in balancing the grid. Asking them to now will be met with skepticism. The trick is to implement tools that give the user ultimate control, whether it’s the ability to set their comfort preferences or override commands if they decide to. Building trust takes time, but if you reward them, they’ll reward you.
Flexibility, Reimagined
In the US, flexibility in consumer load has historically been treated as an emergency resource – a lever to pull when the grid is on the brink. But the Swedish example shows that it can be a standing asset that’s predictable, responsive, and deeply integrated into everyday life.
Getting there will require us to experiment, invest, and engage in ways we’re not used to. The invisible utility model is disappearing. The question isn’t whether customers will start paying attention—it’s which utilities will be ready when they do.
US utilities that embrace that reality, and treat their customers like partners instead of passive ratepayers, will be the ones best-positioned to lead the next decade of grid evolution. Fortunately, they’ve got a playbook to follow.
Author: Blake Davis
