What happens when your customers can become suppliers? First comes disruption, and discomfort at the change. But some players are looking ahead, building partnerships which are the future of the utility industry.
I recently had a chat with Jemma Green, chairperson of Power Ledger – an Australian peer-to-peer (P2P) electricity service provider. Jemma is setting up networks of customers who are linked together via a microgrid to share the benefits of solar and storage assets.
The system incorporates blockchain technology which is similar to the technology behind bitcoins. It allows electrons generated to be recorded and on-sold to other customers in the network.
She used the term ‘Citizen Utility’ to describe the arrangement. That got me thinking about what might be the longer-term impact of P2P networks. We know that certain customer groups in Australia and elsewhere are frustrated with how the rules are changing regarding selling rooftop solar electrons back to the grid operators. They feel cheated by the utilities and the reducing value of the feed-in tariff deal is the driver pushing solar users to adopt energy storage solutions from the likes of Tesla, Panasonic and Enphase.
If I was a utility, my first thought would be to discourage this service. For more than a century, the electric grid has relied almost exclusively on centralized infrastructure, such as large power plants and long-distance transmissions lines. There is billions of dollars’ worth of assets tied up in that system. But distributed energy resources (DERs)—and the customers buying, installing, and using them—are changing the economic landscape for the power sector.
Decentralised off-grid networks like Power Ledger mean that customers can completely circumvent the existing grid system. If the P2P network took off, the new ‘utility’ would end up being the P2P system operator who presumably would keep adding new services to boost their service fee. These new services could include Smart Home initiatives such as elderly care, utilities management, automation and security.
What’s been missing so far in the evolution of P2P, is a trusted, open peer-to-peer platform for DERs to “play” in a shared economy. An independent platform underlies the success of many shared economy businesses. Some have suggested that as decentralized DER markets emerge, the possibility is that the power sector becomes a massive platform for shared economy businesses – like the Internet is today for Net businesses and its customers.
A glimpse of how this market might evolve in Australia is the Amsterdam based Vandebron model, which provides a direct marketplace between local farms generating clean power and local homeowners and businesses looking for a low cost, simple renewable energy source. There are currently 16 farms with profiles on the online marketplace providing energy to hundreds of thousands of consumers – and potentially up to 1 million customers. Vandebron manages to cut utilities out of the equation entirely. That’s bad news for the traditional energy retailers and the distributors.
Jemma Green reckons traditional energy companies have a window of about two years to establish new business models before cheaper batteries further erode their market share. If I was a utility, I would be working out a way to get in on the action. And some of them are doing just that.
AGL is currently running a Virtual Power Plant trial based in South Australian homes. The project will comprise a centrally controlled network of 1,000 residential and business battery storage systems with a combined total of 7MWh capacity that will both store rooftop solar power and help manage grid stability in the state.
If you are interested in the future of Citizen Utilities and P2P networks, then sign up for Australian Utility Week – the Digital Utility expo (29-30 November, ATP, Sydney).
The event will attract around 1500 participants and features 200 experts from the utility technology sector. It includes Australia’s top Smart Energy and Smart Water start-ups speaking alongside utility R&D professionals and utility executives.
This is the only event in Australia or New Zealand that is dedicated to the digital utility theme and its implications for the utility business model, ICT architecture and customer strategies.
Download the showguide to find out more.