Electricity market liberalization: yes or no? Which IT investments make sense right now

On 14 May, the Federal Council of Switzerland provided information on the planned electricity agreement as part of the EU treaties. This agreement concerns the implementation of an open electricity market for all end consumers, as well as the basic supply and consumer protection.

What does this mean for Swiss energy suppliers? There is uncertainty, ​as​ the final decision will likely be made at the ballot box. What impact does this uncertainty have on IT? A significant one, because IT projects for liberalization cannot be implemented overnight. The pressure to analyze, evaluate and determine the IT roadmap and associated investment decisions is therefore considerable. In this blog post, I will examine which investments make sense regardless of the outcome of the ballot.

Our quality of life in Switzerland is significantly influenced by a readily available and affordable electricity supply. Events such as the widespread blackout in Spain and Portugal at the end of April this year highlight how sensitive ​national grids​ are and the impact even short but massive power outages can have on a country.

Decision-makers at energy supply companies are facing numerous challenges today: ensuring security of supply, focusing on net-zero climate targets while expanding environmentally friendly electricity production, integrating decentralized energy sources and enhancing energy efficiency. And now​,​ there’s the prospect of market liberalization? One thing is clear in all these highly regulated areas: complexity is increasing and will only be manageable with powerful digital solutions. The question remains: Which areas require investment, and when is the right time?

We have been supporting energy supply companies in Germany for a long time - so we understand the challenges associated with liberalization. In our experience, energy providers need to prioritize investment in the following five areas:

1. Modernization of IT and data infrastructure

• Managing the smart meter rollout: smart meters are essential for dynamic tariffs, consumption optimization​,​ and flexibility markets; their nationwide expansion and subsequent management are therefore a priority
• Data platforms & interoperability: development of a modern data landscape that can serve as a "data hub" ​and​ cover technical use cases such as billing guarantees of origin or flexibility marketing
• Information Security Act: implementation of new statutory minimum requirements for information security (ISG, StromVV Art. 5a)

2. Digitalization of market processes and customer interaction

• Customer portals & self-service: for tariff selection, proof of origin​,​ and subsequent switching processes
• Digital billing & contract management: for structured procurement, PPAs​,​ and dynamic tariffs
• Integration of third-party providers: for example, virtual power plants and aggregators

3. Flexibility management and grid optimization

• Dynamic grid tariffs & feed-in tariffs: introduction and mapping of these tariffs through IT to control loads and feed-in
• Flexibility markets & virtual power plants: development of platforms for marketing flexibility (e.g. storage, e-mobility, heat pumps)
• Load management & peak shaving: integration in​to​ grid planning and operation

4. Regulatory requirements and transparency

• Separation of basic and market supply: mapping of separate portfolios and structured procurement through IT
• Tariff transparency & communication: customers must be able to understand price changes

5. Cooperation and economies of scale

• Purchasing pools & platforms: for smaller energy supply companies for joint procurement and IT usage
• Outsourcing of special​ized​ functions: such as data management, SDL marketing​,​ or billing
• Standardization & API-first approaches: for the integration of partners and systems

n 1998, amendments to the German Energy Industry Act (EnWG) first introduced accounting unbundling, which involves the separation of grid, sales and generation. This was followed in 2005 by corporate, organizational​,​ and informational unbundling. To achieve this, historically integrated structures had to be dismantled.

The clean separation of data and information flows, particularly sensitive grid data from sales and generation interests was the core task, especially in the case of informational unbundling. Monolithic IT systems had to be extensively adapted or replaced ​with​ new, separate solutions. This required not only technical modifications, but also a cultural shift within the organization and the establishment of new, formal communication processes to ensure equal treatment of all market participants.

Early and consistent planning in interdisciplinary teams, combined with comprehensive change management and effective internal communication​,​ proved helpful in gaining employee buy-in and creating acceptance.

1. The emergence of process-oriented and service-oriented IT architecture: with clearly defined interfaces and a stronger focus on modular systems and service-oriented architectures (SOA). This allowed services to be offered to both internal (separate) divisions and external market participants without discrimination.

2. A significant increase in the importance of data management and data security: the strict separation of network and sales data placed data management at the forefront. Governance structures for data had to be created, access rights precisely defined​,​ and mechanisms implemented to prevent unauthorized data flows (Chinese walls). Information security and data protection (later GDPR) gained enormous importance.

3. Standardization and interoperability: to ensure non-discriminatory data exchange with all market participants, the standardization of data formats and communication protocols became essential, such as EDIFACT, and later increasingly web-based services. Thus, IT had to ensure interoperability.

4. The need for more agile IT development and adaptation: The frequently changing regulatory requirements demanded greater flexibility and faster adaptation cycles from IT. Agile methods became increasingly important to respond promptly to new requirements.

5. Costs and complexity as drivers for outsourcing and cloud strategies: The high initial and ongoing costs of operating separate IT systems, along with increasing complexity, led energy supply companies to increasingly consider outsourcing models and later the use of cloud services to take advantage of economies of scale and enhance flexibility - always with strict adherence to security and compliance requirements.

The ability to manage data securely, separately​,​ and in a standardized way has become a core competency.

Looking at the investment requirements, it is clear that we are discussing a high investment volume, with individual components being highly interdependent. The basic prerequisite for making the right decisions regarding these requirements is a transparent view of the current holistic digital landscape of the organization, including processes and IT systems. This approach is known as Enterprise Architecture Management​.​ EAM has proven effective in practice​,​ and companies are increasingly using this approach to examine their digital landscape.

With a structured approach consisting of four phases, it becomes clear what the current enterprise architecture looks like, what business relevance the elements have, what data is generated where​,​ and how responsibilities are regulated. In our experience, many companies ​lack​ this foundational understanding. However, investing in this first step is essential for active management and efficient implementation of all subsequent measures. This ensures that investments are properly allocated and risk​s​ remain low.

The highest priority should be given to investments in specialized IT applications and their underlying data infrastructure. This is particularly driven by legal and regulatory requirements (observe deadlines!). Additionally, data platforms are necessary for managing guarantees of origin, accurate billing and processing of PPAs​,​ and later for scaling customer switching processes.

All market processes and customer interactions should be digitalized simultaneously, or at the very least afterward. ​This​ particular​ly​ includes customer portals with self-service functions (not self-admin functions - who enjoys managing that themselves?), digital billing and contract management, ​and​ the integration of third-party providers (e.g. PV, storage​,​ and e-mobility, if not already part of the company's portfolio).

We assess investments in flexibility management and grid optimization as medium to high priority. These measures help to limit grid expansion costs and open up new business models. In this context, it is of course necessary to examine whether the performance of the grids can tolerate a "waiting period", taking into account the expansion.

In this area, we classify the introduction of dynamic grid tariffs (formerly pilot - if the foundations are in place), flexible feed-in tariffs for PV systems, load management for e-mobility and heat pumps (peak shaving) and preparation for flexibility markets.

Data and AI should not be overlooked in this context. One thing is certain​:​ more and more data will be available due to the transition to decentralized electricity production, the electrification of areas such as mobility and heating, the development of new storage options​,​ and the networking of these systems.

As a result, there will be a growing need to leverage this data to create value for various purposes. It certainly makes sense to consider the architecture from the end perspective: what significance do data and AI hold for my future business model? Which use cases can be pragmatically implemented and tested for their value contribution?

The expansion of the IT infrastructure places new demands on operations, with security being the foremost concern. The requirements for operating critical infrastructures must always be considered. Unfortunately, BCM and ITSCM are often overshadowed by security concerns.

The ​recent ​events in Spain and Portugal highlight the issue: how do I ensure security of supply in the event of disruptions and technical failures? BCM involves planning, preparing​,​ and managing measures to maintain or quickly restore operations even in crisis situations. ITSCM​​ is a sub-area of BCM and focuses on recover​ing​ critical IT services. This includes securing central IT systems, redundancy and backup strategies, emergency plans and restart procedures. If these two competencies are considered and developed from the outset, the result is enhanced investment protection.

The liberalization of the electricity market brings uncertainties. However, investments in IT infrastructure, data platforms​,​ and customer processes are worthwhile, regardless of the outcome. Energy supply companies must act now: establish an enterprise architecture, meet regulatory requirements and leverage digital innovations. The necessary groundwork - especially in terms of data cleansing - should be completed at this stage, as implementing subsequent steps will also take time. Those who invest wisely now will secure decisive competitive advantages and remain future-ready. Now is the right time to set the course.