Segment to Survive

Households across Europe are changing habits faster than energy retailers can say “Household PV inverters”. The rise of electric vehicles, heat pumps, and even batteries is transforming not only how much electricity we consume, but When and Why and How. The familiar “average household” is disappearing, replaced by fragmented segments with very different behaviours, value profiles, and needs.

For energy retailers, this shift is both a risk and an opportunity. The winners will be those who stop treating customers as one mass market and start building strategies around real segmentation

Electrification in Numbers

• Heating still dominates: In 2023, 62.5% of household energy consumption in the EU was for space heating, with another 15.1% for water heating,  together 77.6% of household use (Eurostat, 2025)
• Fuel mix shifting: Electricity now makes up ~26% of household final energy consumption, with renewables and biofuels at ~23.5% (Eurostat, 2025)
• Heat pumps are scaling fast: Around 3 million units were sold in 2023 across Europe, bringing the stock to ~24 million. Today, more than 19.7 million are installed in the EU, serving about 16% of residential and commercial buildings (EHPA 2024)
• EVs adding demand: An EV can add 2,000–3,000 kWh per year per household, reshaping load profiles and peaks. (IEA 2020)

Put together, that fully electrified ultramodern household with the heat pump and the Tesla and all the smart appliances can consume five times the electricity of a small apartment, often 8,000–12,000 kWh annually. Jikes. 

The “average household” model is no longer fit for purpose

If you(you, the energy provider) don’t know what your customer segment looks like, you’re operating in the dark. You need to take a good look at your customers and realise that they are all special in their own way(ah, cute!) and reframe them into some meaningful segments. Here are some common examples:

1. Low-use flats. Minimal consumption, often price sensitive, but also maybe not that bothered.
   
   
2. Emerging electrifiers. He just got an EV. Not sure when to charge it. Googling ‘solar panels’, but not quite there yet. Growth opportunity.
   
   
3. High-consumption electrified homes. Large families, EVs, heat pumps, PV, a pool and air conditioning. Often higher margin but demanding better service, and a strain on the poor grid.
   
   
4. Occasional/holiday homes. Irregular usage and different expectations around billing and support.
   

But it’s not just about identifying groups. At critical decision points, such as contract renewal or buying a new EV,  many customers switch providers. Churn rates at these moments can reach 25%, driven by competitors offering personalised, dynamic tariffs. Without actionable segmentation, how will you know which customers to retain, when to act, and with what offer?

Yes. AI.

With an AI Tariff & Flex Segmentation solution, you can tackle this challenge head-on and:

• Detect flexible assets in the home. EVs, solar panels, heating systems, and why not, some batteries?
  
• Analyse tariff suitability. Showing the financial impact of switching tariffs for both the customer and the utility.
  
• Optimise savings with smart control. Quantifying benefits from automation of flexible loads, enabling demand response.
  

This makes it possible to move from high-level campaigns to precision engagement. Instead of losing customers at renewal, you can nudge them with reassurance that they are on the right plan, or proactively recommend a better one.

Actionable Steps for Providers

1. Analyse with intelligence, not averages
   Complement household energy data with AI analytics to build a 360° view of customers. Move from static segmentation to dynamic, actionable insights that update as assets like EVs or heat pumps are adopted.
2. Design offers for those precious decision moments
   Contract renewal, EV purchase, or installing a heat pump are churn flashpoints. With segmentation, these moments become upsell and retention opportunities, offering dynamic tariffs, smart charging, or solar optimisation exactly when they matter most.
3. Align organisation and measure impact
   Track churn reduction and customer lifetime value by segment, not just overall averages. Even a 3% churn reduction can deliver €1 extra revenue per customer per year, while targeted flex services at renewal drive lifetime value even higher.

The strategic angle

Electrification is not just about more kilowatt-hours. It is redefining customer relationships and reshaping competition. With AI-powered segmentation, utilities can finally move from reactive churn management to proactive retention and growth.

The utilities that act now will gain an early-mover advantage, while those who rely on generic campaigns will see their customer base steadily eroded by competitors with sharper targeting.

Want to give it a go? Schedule a demo here and make sure you mention ‘Segmentation’ in the text form, and we’ll reach out!