The Flexibility Energy Contract Revolution: How European Energy Retailers Can Thrive in 2025 and Beyond

As we approach spring 2025, European energy retailers face a pivotal regulatory shift: all core players with more than 200,000 customers will be required to offer dynamic energy contracts. This isn't merely a compliance challenge—it represents a fundamental transformation of the energy retail landscape.

The Current State of Energy Retail

Traditional energy retailers are at a crossroads. Digital challengers like Tibber and Octopus Energy have already begun capturing the most profitable customer segments through innovative pricing models and superior digital experiences. These nimble competitors understand that today's energy consumers expect the same level of personalization and digital engagement they receive in other aspects of their lives.

Meanwhile, established incumbents possess a tremendous yet underutilized asset: their existing customer base. Despite having millions of customers, many struggle to effectively cross-sell additional products and services or migrate customers to more sustainable, profitable contract models. However they can enroll those customers into Dynamic or Type-of-Use tariff energy contracts for e.g. EVs or heat pumps to keep it simple yet beneficial for both consumers and incumbent.

The Three Pillars of Successful Digital Transformation

For energy retailers to thrive in this new environment, they must build capabilities across three critical domains:

1. Detection: Understanding Your Customer Base

The foundation of any successful digital strategy begins with deep customer understanding. Smart meter data provides unprecedented visibility into customer behavior, particularly regarding Distributed Energy Resources (DERs) like solar PV panels, EVs, battery storage, and heat pumps.

Forward-thinking retailers are now leveraging this intelligence to:

• Identify DER owners within their existing customer base

• Create highly targeted marketing campaigns with personalized savings recommendations

• Educate and empower customer service representatives to have more meaningful conversations about energy optimization

  
  

2. Engagement: Building Trust Through Transparency

Even with low-resolution smart meter data, retailers can create meaningful customer engagement. The key is delivering transparent, personalized insights that build trust and demonstrate value before asking customers to switch to dynamic contracts or specific DER type-of-use tariffs.

Leading retailers are using data to:

• Educate the masses on their flexibility potential using more differentiating and engaging (Type-of-Use / dynamic) energy contracts

• Simulate potential savings under more dynamic pricing models

• Offer tailored flexibility contracts for EV owners that reward off-peak charging

• Personalize contract and load-shift/peak shaving recommendations based on solar PV production, consumption patterns and DER device ownership

• Reduce customer service costs through improved self-service options and genAI enriched personal conversations

• Create comprehensive customer profiles that enable more efficient support interactions

3. Orchestration: Unlocking Higher-Value Services

High-resolution & realtime smart meter data opens doors to sophisticated energy services that benefit both customers and grid operations. This represents the future of energy retail, where providers become trusted energy advisors rather than commodity suppliers.

Progressive retailers are developing capabilities to:

• Use real-time energy data for dynamic usage / tariff insights, load shifting and peak shaving optimization, as well solar PV self-consumption

• Design specialized flexibility contracts that incentivize EV, HVAC and BESS owners to consume during renewable energy peaks

• Support (cloud-based) home energy management systems (HEMS)

• Optimize intraday/imbalance trading based on actual consumption forecasts

• Enable real-time grid protection and energy cost savings through demand side flexibility (DSF)

• Support dynamic / power capacity grid fees in congestion markets

The Path Forward

The retailers who will thrive beyond 2025 are those who view dynamic contracts and specialized type-of-use tariffs not as regulatory burdens but as catalysts for digital transformation. Success requires building technological capabilities across all three pillars—detection, engagement, and orchestration—to create a seamless customer journey.

At NET2GRID, our NET2GRID EnergyAI® service is specifically designed to support energy retailers through this transformation by providing all three essential components in a single SaaS solution. Our approach enables retailers to activate a digital sales engine that can successfully migrate existing customers to sustainable dynamic contracts and device-specific tariffs with minimal churn risk. At the same time the technology can also be used to target and acquire new customers via look-a-like campaigns.

The energy retail market is changing. The question for incumbents is no longer whether to transform, but how quickly they can build the capabilities needed to compete in this new dynamic era.