According to Real Utilities general manager Paolo Bevilacqua, the utilities arm is already offering its “cheaper, cleaner and simpler” energy offering to residents and tenants of Frasers Property’s residential and shopping centre developments, and is now making its foray into the industrial sector using an innovative financial model.
Real Utilities model eliminates expensive capital costs because the retailer essentially rents roof space from the landlord to install and operate its own energy infrastructure, such as solar panels, batteries and biodiesel generators.
The utility makes its money by selling the solar generated on the roof to the tenant and the tenant ends up with cheap, clean energy without forking out massive amounts of capital.
While the renting roofspace model has been tried elsewhere, Bevilacqua says his team realised customers didn’t want to commit to 10 years of buying solar energy from the owner of the energy infrastructure.
“That was a friction point.”
Another common complication is that the rooftop solar does not fully meet the customers energy demand, which often results in two different energy agreements – one for the rooftop solar and another for grid energy.
Real Utilities has overcome this dilemma by taking over the entire electricity supply for the site offered for two years like a normal retail agreement, with a mix of the solar generated offsite and offset grid electricity.
“The result is one carbon neutral bill”.
It might not suit every tenant, Bevilacqua says, “but what we’re finding is the majority want the benefit [of solar and batteries] but don’t want to fork out the capital.”
So why does a property developer need a utility business?
It was a bit left field when the property developer decided to set up its own utilities business in 2017. In the early days, the intention was to achieve interactions with customers beyond the point of sale and offer an energy service that was cheaper, simpler and cleaner than the big three energy retailers.
The company started off with a few embedded networks in its residential developments such as Tailor’s Walk in Botany and Discovery Point in Wolli Creek, both in Sydney, and has since branched into retail, supplying the electricity for Burwood Brickworks (eastern Melbourne), Eastern Creek Quarter (Sydney) and most recently the Ed.Square Town Centre (Sydney’s southwest).
The utility manages to meet its affordability promise for tenants and occupants using a traditional embedded network where power is purchased in bulk and then provided to a network of customers behind the meter with the added benefit of being certified carbon neutral power.
Overcoming the barriers to embedded networks
Bevilacqua says embedded networks had a chequered history before “Power of Choice” regulations came in that stops customers getting locked in at the risk of ever increasing prices.
He says even though the regulation came in three years ago, residents and tenants can still be wary. That’s why Real Utilities aims to be highly transparent with the offering – from point of sale, with reminders and follow ups to make sure buyers understand the product and its advantages.
The strategy has paid off, with the utility boasting 100 per cent customer retention within its residential sites.
The company also does its best to communicate with customers about their bills so that if they feel like they could get a better rate, they have access to the data to check.
“That gives them peace of mind,” Bevilacqua says.
He adds that most residents are more attracted by the low prices than the green credentials, but large corporates are particularly interested in carbon neutral power.
The notion of “green for the price of brown” turns out to be an attractive proposition for businesses that have made low carbon commitments.
And it’s coupled with the notion that, “there’s this growing expectation that organisations like ours will be able to provide [clean energy] for customers.”
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