Competing on the new energy frontier: How Italian utilities can win

By Andrea Bassanino, Pierluigi Troncatti and Antonio Maresca

Italy’s energy retail arena has entered a phase of unusually intense competition. Incumbents are now facing digital-native attackers, cross-industry entrants, and the growing influence of platform business models. The result is a market that is more dynamic and more unforgiving: Churn is structurally higher, price transparency is greater, and the boundary between “energy supplier” and “ecosystem orchestrator” is blurring. Winning in this environment means assembling a coherent set of moves – commercial, digital, operational, and selective partnerships or acquisitions – that reinforce one another over time.

What is really changing – and why it matters now

Three forces are rewriting the rules:

1. Market liberalization is accelerating customer mobility. The phase-out of protection regimes has lowered switching frictions and amplified price sensitivity. Churn in the domestic power segment has risen materially – outpacing gas – which expands both risk and the opportunity to cross-sell when the right propositions and journeys are in place. The headline is simple: The customer base is more fluid, and the cost of inaction compounds quickly.
2. Digital attackers are competing with a different operating logic. They assume a world of decentralized, increasingly autonomous energy systems and persistent price volatility. Their offers are mobile-first, often include dynamic or hybrid pricing, and wrap commodity supply with energy management tools that make usage visible, actionable, and even engaging day to day. The more advanced of these players also monetize flexibility and license their software to third parties, positioning themselves as software-and-services businesses as much as retailers.
3. Cross-industry entrants are reshaping expectations. Newcomers span digital brands, physical network operators, and, potentially, big-tech adjacencies. Their shared playbook emphasizes simple bundles, recurring interactions, and loyalty mechanics that feel modern compared with legacy retail energy experiences. For utilities, the strategic question is not whether new entrants will arrive – they already have – but which of their capabilities to neutralize, which to mimic, and which to partner with.

The new competitive map in Italy

Across Italy, utilities retain their scale, brand, and local presence – but the ground under their feet is moving. Since 2019, the domestic market has seen both large diversified utilities and smaller challengers gain share, largely at the expense of the historical incumbent. The end of the tutela regimes has been a catalyst: Awareness is higher, comparisons are easier, and customers behave less like “accounts” and more like “subscribers” who evaluate value continuously.

Three main areas are where we find the most disruption – and opportunity:

Customer interaction and channels. Digital attackers maximize low-friction, high-frequency touchpoints – apps, proactive notifications, micro-insights – turning energy into a daily experience rather than the subject of an annual renewal discussion. Entrants with existing customer care infrastructures are repurposing them to drive engagement and cross-sell. For utilities, closing the self-service gap and moving from reactive problem solving to anticipatory service is now table stakes.

Service offering and differentiation. Attackers compete with dynamic pricing, energy management features, and modular add-ons. Others differentiate through transparent bundles and a clear narrative about savings and sustainability. Utilities can and do differentiate on breadth – commodity, devices, services, and local delivery – but breadth must translate into clarity around “jobs to be done”: reduce bill volatility, decarbonize the home, simplify life. More does not equal more value unless customers instantly understand the “why.”

Community and ecosystem. New players build communities (digital and local), gamify savings, and reward flexibility. Utilities are already anchored to a place – municipal programs, cooperatives, local sponsorships. The next step is to connect this local credibility with platform economics: communities that are digitalized, scaled, and rewarded for flexibility as much as for spend.

What digital attackers are teaching the market

Several European attackers illustrate where the market is heading. Their common traits include mobile-first journeys, dynamic or real-time tariffs with clear guardrails, and a software layer that makes the home “visible” in terms of usage, production, and storage. They increasingly operate virtual power plant models, orchestrating behind-the-meter assets and monetizing flexibility. Importantly, some export their systems to incumbent utilities, signaling that tomorrow’s winners will be those who treat software and data as primary control points, not supporting infrastructure.

An example frequently cited is the platformization of retail: The technology stack becomes a product in its own right – available to other suppliers – while the retail brand focuses on customer experience and growth. The implication for Italian utilities is clear: A platform mindset can coexist with strong retail brands; it is not a choice between being a supplier or a tech firm, but a decision to own the layers that matter.

About telco – one example, not the only arc

Connectivity is one of several adjacency plays we are observing. For some utilities, wholesale-based resale or targeted partnerships offer a way to improve lock-in and lower acquisition costs; for others, the economics or complexity may not stack up. The strategic options range from pure resale to third-party networks to selective co-investment in specific geographies. Each path has different implications for margin, differentiation, and operational complexity – and none is universally “right.” Telco should be evaluated as a means to an end (customer stickiness, channel leverage, data reach), not an end in itself.

Where Italian utilities can lean in – without over-owning

Based on current market evidence, four execution themes recur in winning strategies:

1. Make volatility and flexibility part of the value proposition. Move beyond static plans toward dynamic or hybrid constructs that share upside with customers while protecting against downside shocks. Pair tariffs with an energy management layer that translates price signals into simple actions and visible savings. The goal is to turn volatility into value customers can see.
2. Redesign commercial engines around churn economics. Treat churn reduction and lifetime value as the North Star for product, pricing, marketing, and service. That means clearer offer architectures, proactive save motions before customers start shopping, and referral mechanisms that mobilize satisfied users as micro-channels. Local reseller networks can amplify reach when equipped with unified pricing logic and digital toolkits.
3. Build a platform, not just an app. Adopt a product management model, unify first-party data (usage, device telemetry, payments, support), and expose APIs to trusted partners – installers, device makers, financiers – to assemble propositions in weeks, not quarters. In practical terms, aim for a “home energy OS” capable of hosting both utility and third-party services.
4. Use selective partnerships and, where appropriate, M&A to compress time. In a market where attackers move quickly, time is the scarcest resource. A structured view of potential partners or targets – digital DNA, customer reach in priority provinces, green sourcing, and system interoperability – helps accelerate capability building while preserving cultural fit and brand coherence. Integration plans should prioritize data, pricing engines, and customer interface as the control points to own.

Guardrails for execution

Simplicity beats optionality. Dynamic pricing without a story creates complaints; bundles without clarity create confusion. Name offers in plain language, show how flexibility earns value, and turn the bill into a scorecard that celebrates savings and contributions to community resilience.

Orchestrate, don’t over-own. The future economics will reward those who coordinate devices, data, and demand – not those who try to internalize every capability. Prioritize control points (billing, data, pricing engines, customer interface) and partner where others can move faster or cheaper. This mindset also reduces the risk of straying into low-margin adjacencies without a clear rationale.

Measure what matters across the journey. Align internal incentives to a concise set of outcome metrics – net churn, attach rates for services and devices, digital self-service, realized flexibility value – so that product, pricing, service, and operations are optimized toward the same goals.

The urgency to act

This is not a distant scenario. Liberalization effects are here; churn is elevated; digital attackers are scaling; cross-industry entrants are normalizing modern service expectations. Delay increases the cost of catch-up: in data assets not collected, in customers trained by others’ experiences, and in organizational muscle memory set around a slower cadence. The message to leadership teams is straightforward: Move now to secure the control points that will matter in the next cycle.

What happens next depends on you

There is no single blueprint. The right answer will vary by player – depending on legacy assets, geography, channel mix, customer base, and risk appetite. Some will lean into platformization and dynamic pricing; others will double down on local ecosystems and device-enabled services; others still will use targeted partnerships or acquisitions to compress time. What matters is that you choose deliberately, sequence moves coherently, and execute with speed. The opportunity is real; so is the competition.

We can help you map the options, pressure-test the economics, and assemble the portfolio of moves that fits your starting point and ambition.