Why the energy digital transition won’t mirror telecom 1:1

Energy isn’t becoming a “dumb pipe.” EU unbundling, regulated returns and capacity mechanisms keep networks investable, while software-led DER orchestration grabs new margins. Here’s why the energy digital transition plays by different rules—and where value pools are shifting.

Europe’s market design hardwires neutrality. Unbundling separates transmission/distribution system operators from competitive supply, blocking the old telco-style vertical stacks and preserving open-access “pipes.” This structure—embedded in EU directives and reinforced by regulators—means wires businesses remain ring-fenced even as new software layers emerge. Energy+2ceer.eu+2

Regulation also sets a revenue floor. In Great Britain’s RIIO-2, the allowed cost of equity was cut to ~3.95% versus ~7–8% in RIIO-1—squeezing upside but stabilizing recoveries for monopoly networks. Translation: pipes persist, but easy margin isn’t in the pipe anymore. Ofgem+2UKERC+2

Reliability is explicitly procured. The UK Capacity Market pays plants and flexible resources to be available when the system is stressed—a structural backstop telecom never had. In 2022/23 and 2023/24, payments covered ~52–53 GW per year, totaling ~£1 billion in one fiscal year. EMR Settlement Limited+1

Meanwhile, the frontier is digital and distributed. In the U.S., FERC Order 2222 opens wholesale markets to aggregated distributed energy resources (DERs)—from batteries to EVs and smart thermostats—pulling software, data and orchestration to center stage. Expect faster innovation cycles, richer customer experiences and platform economics that look more like cloud than copper. Federal Energy Regulatory Commission+2Federal Energy Regulatory Commission+2

So who wins in this energy digital transition?

• Utility-grade operating systems: Kraken (spun out of Octopus Energy Group) blends billing, settlement and device control, now contracted to >70 million accounts and processing ~15 billion datapoints/day. These platforms lower service cost-to-serve and enable DER-era products. kraken.tech+1

• DERMS/VPP orchestration: EnergyHub helps utilities stand up virtual power plants (VPPs), manage peak load and integrate distributed assets, with modules like OpenBYOT for rapid thermostat aggregation. EnergyHub+1

• HEMS front ends that translate complexity into one-tap comfort & savings: ecobee (smart thermostats and sensors), Vivint (smart-home platform adding HEMS features), and Tibo Energy (AI EMS claiming up to ~30% cost savings; recent €6 m raise to expand in EU). These brands shape customer trust and data flows at the edge. IO++5ecobee.com+5ecobee.com+5

Takeaway: Utilities won’t disappear into dumb pipes—market design and regulation won’t allow it. But sustained profit growth is likelier where companies co-own the customer interface and orchestrate flexibility at scale. The winning model blends regulated stability with software speed—owning trust, data and outcomes, not just electrons. That’s the essence of the energy digital transition.