New business models, platforms and communities are revolutionising the global energy sector, the National Energy Efficiency Conference heard last week.
Dr Philip Lewis, chief executive of energy think tank VaasaETT in Finland, told the Future Focus – Cutting-Edge Energy Service Models panel there were now 500 million households around the world that have choice through open energy markets, and some 200 different business models have emerged.
“There are going to be multiples more than that in the next few years,” Dr Lewis said. “And we have to get away from this way of thinking that there is one best model or two best models; there are loads of different models that are good for different purposes.
“We can’t control the future and we certainly can’t know exactly where it’s heading. We have to become adaptive organisations in every single way because… next week there will be a great new model that you hadn’t thought of and you have to be able to respond to that.”
New business models emerging include:
- Hybrid Ownership – innovative solutions are emerging where people can buy solar panels in remote locations rather than on their own roof
- Buyer Centric – businesses make it easier for the customer to buy energy, assisting them through options like dynamic purchasing
- Power of Attorney – similar to what we are seeing in commercial buildings where essentially the utility manages your asset for you. “We are seeing this now in the residential market in Sweden,” Dr Lewis said. “Six per cent of energy is now under Power of Attorney.”
- Smart grid solutions – require a lot of collaboration and investment but potentially have a big role to play
- Uber-style utilities – where consumers and producers engage directly to make deals
“Vandebron is the fastest growing utility in the Netherlands right now,” Dr Lewis said. “This utility is amazing because each person that has energy to sell, sets their own price… and, in a sense, creates their own company that is selling energy through this platform.”
The company is essentially linking consumers with producers and acting as a middleman. “Of course you can see that it will move into energy efficiency at the user level… and at the producers’ level,” Dr Lewis said.
He said the future would involve communities partnering with utilities.
“Utilities have to figure that they can’t control the game in the future but they can be a very major part of it.”
Companies are also utilising behaviour change apps to minimise energy consumption. Sweden’s E-on armed 10,000 participants with special apps that monitored their energy use in real time and visualised energy consumption in creative ways – slashing energy use by an average of 12 per cent.
“For business, there is actually massive bottom-line benefits,” Dr Lewis said.
Software will be a game changer
Energy intelligence software will transform energy management as businesses come under more pressure to improve sustainability performance, said Christian Weeks, EnerNOC’s managing director, Australia & New Zealand.
EnerNOC has worked with 30,000 businesses and 50 utilities around the world with demand response and customer engagement.
“Energy intelligence software is transforming energy management in the same way that other types of software have transformed… operations like customer engagement, human resources and resource planning,” Mr Weeks said.
“Partnership models will accelerate this transformation with new service models that are responsive to evolving customer needs.”
Mr Weeks said EIS had evolved due to pressures on businesses from investors, regulators, consumers and employees.
“The growing complexity in energy and sustainability management has given rise to a host of new software applications that aim to simplify the complexity,” he said.
Keep it simple
Marc England, AGL’s executive general manager new energy, agreed that new business models and software were radically altering the sector, but warned developments must be simplified for consumers.
“I worry that there are too many complex business models and, if you can’t keep it simple for customers, they won’t take it on,” he said. “In the coming years we’ll see some very clever but perhaps complex things coming our way and the things that will really get traction are the ones that take the complexity out and make it simple.”
He pointed out that 70 per cent of customers never contact the utility.
“As an industry we have to be sure we don’t misread that new technologies and new ways of getting your energy [mean] consumers are suddenly wanting to get very actively engaged. Most people will want to set and forget.”
AGL has committed to shutting down its two coal-fired power stations.
“People often forget that just because you’re large and incumbent that you can’t evolve your business model,” Mr England said.
Battery storage with solar is one such direction.
“As soon as you stick a battery in the house, there are seven potential flows of energy all at different price points – and many of them with a choice for the consumer to make either directly or indirectly. Whether you decide to store in the battery, or export into the grid, or import from the grid, or charge your battery or discharge your battery, there are so many choices similar to that.
“We think that is exactly what we have to do – take the complexity out of that system and make things simple for consumers.”
Mr England called for several new policies to be enabled in the market, including:
- appropriate technology standards for batteries and other products to protect consumers rather than place barriers in the market
- competitive neutrality so that all companies are operating on the same grounds under the same rules
- ring fencing monopoly businesses
- cost effective network tariffs
According to Mr England, the integration phase “is critically important to making sure the efficiency of the system is good”. Likewise, the aggregated phase (where homes and communities are linking together), will alter the landscape once more.
“The choice we need to give consumers in the future is how they get their energy, how it is managed for them, and give them more independence in how that works,” he said.