Making Boring Energy Sexy!
Updated: Jan 6, 2020
In my last post, I discussed the new Consumer Data Rights (CDR) legislation with regards to Energy. Something else is also happening that will empower the consumer and along with CDR, Australia is proving to be a global test bed for a new kind of power plant – your home.
When you see coal barons and one of the largest oil companies make a move into household renewable energy, you know change is afoot. This is happening now, in our ultra-coal friendly Australia. Trevor St Baker (who made his fortune from coal powered plants) is aiming to sell his retail energy business ERM to Shell. This may sound like an environmental horror story of oil and coal colluding to further plunder our environment, but they are actually looking to turn Australian households into mini green power stations.
How will this transition actually happen though?
The major problem around household electricity is that, to date, it has been supplied as an essential service. Expensive infrastructure has been built and subsidised over many decades to support this service. As such, the cost to the consumer today is not really reflective of all that historical investment. If all that infrastructure was to be delivered from scratch today (coal mines, train transportation, coal powered stations, heavy electricity transmission) there is not a hope in hell it would be financed.
'If all that infrastructure was to be delivered from scratch today (coal mines, train transportation, coal powered stations, heavy electricity transmission) there is not a hope in hell it would be financed.'
Additionally, there has been massive environmental cost that has not been factored in (other than to kick the can down the road for our children to deal with – sorry kids!). Much like our water and food supply chains, the current models are not sustainable and not particularly forward thinking. Weaning off this antiquated model is starting today and will likely happen more quickly than the average Joe will expect, mainly due to the arrival of the electric car (many sub $50k models will be available in 2020), rapidly improving artificial intelligence and the increasing fall of solar and battery costs.
Royal Dutch Shell (who did a royally good job in f**king up our planet) now wants to turn each Aussie household into a virtual power plant. This will be achieved using solar, real-time smarts, batteries, and electric vehicles as part of a new smarter distributed energy network. This will reduce the need for base-load power, currently supplied by inefficient coal plants delivered by expensive transmission networks. Over time, the currently expensive infrastructure requirements will reduce to smaller networks and the new energy will be free (yes, the sun is free unlike black coal buried hundreds of meters deep).
So, what will this mean for the new power plant owner? The consumer will now have the ability to refuel their electric vehicle for free, sell excess power to their neighbours and play an important role in the decarbonisation of the grid. 2 Add in the electric vehicle and it’s just sexy and I want it now! Judging by the numbers of new Tesla’s on the road, I am not alone.
'This is an emphatic and empowering mind shift, energy goes from a boring essential service to something that’s now bloody interesting.'
A lot of the future smarts will be handled by technology using real-time meters, new grid capabilities but also a new level of consumer engagement. The consumer, using their smart phone, will track the charging of their car, understand the implications of running energy hungry appliances all at the same time and optimise their energy plant.
The days of being charged per kilowatt hour (kWh) and paying for expensive infrastructure (through monthly standing charges) should transfer into a new subscription service. I think these types of charges will seem alien to the next generation, much like we look back at paying for Flagfall, calling your Mum in the UK or paying to access voicemail on your mobile. The subscribed energy service (much like your mobile phone plan), will instead be tiered on how you use your energy – for example; a basic plan maybe suited to a couple who don’t drive much and work all day and a premium package would be for a family with two leased electric vehicles that have half the family at home most of the time. Simple and easy to understand.
'I think these types of charges will seem alien to the next generation, much like we look back at paying for Flagfall, calling your Mum in the UK or paying to access voicemail on your mobile.'
There would be no nasty surprises from bill shock, no need to search for better deals each month and hopefully a sense of being part of something new and exciting. As with any subscribed service (think Netflix), it really works when there becomes a trusted level of the service provider getting to understand you over time. With this, you are surfaced with new and engaging content or value add services (i.e. please trial an electric SUV for the weekend). The content will be based on your lifestyle, aspirations and values.
But wait! I am not talking about futuristic apparitions - subscription energy is here today. ASX listed, Amaysim, are the first large scale retailer to take this bold step and help take energy from boring to getting a tad more interesting. So without immediately turning their house (or flat) into a power plant, how will Amaysim deliver an engaging platform that today’s consumer will buy into and then stay engaged? I have to admit, Netflix was pretty ordinary when it first arrived in Australia, with little new content but now it’s a staple diet for my family. Add in new weekly content and better profiling of the consumer’s tastes through AI, then it’s something engaging and of value. This is Amaysim’s challenge.
I believe subscription energy will initially appeal to the younger and socially aware profile because it actively encourages the consumer to use less (you carry over extra units of energy into the next month). With the help of a real-time energy meter and app, I now have the tools to better manage the energy in my home. Sceptics should note how engaged and loyal Powershop’s customer base have been with their ground breaking app and pre-purchase of credits. Just take a look at their healthy NPS compared to other energy retailers.
Amaysim are treading uncharted waters and will have to learn and iterate quickly until they find the conversations that keep their customers regularly engaged. This is a bold, long play strategy from them and I sincerely think they will set a new trend. Solar and renewables will play an important role to keep that younger demographic engaged – this will be interesting to see how that plays out.
The arrival of subscription energy, a new energy paradigm and the new consumer data right framework are a perfect match. They all need each other to work well, the consumer needs to have their data easily shared for their benefit to move into this new energy paradigm with decisions to new packages made easy and seamless. As an advocate for renewable energy and consumer power (pardon the pun), I welcome the arrival of subscription energy plans.
Ross Sharman is the Co-Founder of Accurassi and an advocate for renewable energy and consumer power.