When we say that consumers will own the future of energy, we mean just that!
The mainstream energy sector in Australia needs to get over any delusions that the future will look like the past, with a bit of technology secret sauce sprinkled over it; and utilities should be getting ready for the net zero energy home, or become increasingly irrelevant.
GAVIN DIETZ: CONNECTED HOME GUY
Early in the new year I’ll be joining one of the panels at an event that has rapidly become Australia’s top forum for the rights, expectations and future opportunities of energy consumers.
For 2019, Energy Consumers Australia (ECA) is focusing on the empowering role of data as the core theme for its annual Foresighting Forum, now in its third year, taking place in Sydney on February 21-22. You can see more on the forum – titled Take charge: Data powering better energy outcomes for consumers – here.
My big early takeaway from this topic is that it’s consumers who will be taking charge, supported by data, and the energy industry will have to adapt to a new era where power companies (and others) will provide consumers with services to buy, manage and sell electricity from and through the grid, but won’t call all of the shots.
Consumers genuinely calling the shots themselves is not how most energy companies see it.
The shorthand version of their preferred plan is to largely keep control of energy data from the ongoing rollout of smart meters, even if technically consumers own it and certainly pay for it. They’re also seeking to aggregate consumer-owned energy infrastructure such as rooftop solar systems and batteries into the new buzz phrase of our energy times, virtual power plants (VPPs), which means utilities would acquire rights to turn people’s appliances on or off, or drain their batteries when the grid needs extra electrons fast.
The obvious pushback question is this: Are they deluding themselves? Here we have one of the least-liked, most-distrusted industry sectors in the nation effectively saying to people: Trust us with managing your energy future and controlling your expensive assets, including in ways that could negatively impact on your lifestyle and the optimal financial return from your energy investments.
I mean, what could possibly go wrong?
It’s time to speak up for the end consumer
So to wrap up 2018 for Wattwatchers, and to look towards next year, I want to speak up for the end consumer in the electricity system. And I want to flag that Wattwatchers will be going deeper and deeper into this territory in 2019 and beyond, pursuing our founding vision to empower consumers with their energy data, and also with greater self-control over their generation, consumption, storage and trading of electricity.
Above all, it’s time for this conversation to be elevated, as the ECA is doing with its Foresighting Forum. The new year brings the potential for ever-increasing technology-driven change in the energy sector, and politically 2019 is shaping to be pivotal for the nation’s vision for its energy future (Is it clean and renewable? Or is it remaining over-reliant on coal?).
Now that Australia has over 2 million solar-powered homes, up from a mere 7000 circa 2007, energy sector attention is turning increasingly to battery-based home energy storage systems, which can spread the on-site beneficial impact of rooftop PV into the night-time, and also allow home-generated renewable energy to be traded with the grid.
High-by-world-standards power prices add momentum to the battery push. But already the early hype* around the speed of battery uptake expected for Australia is falling well short as savvy consumers do the numbers and work out that a 15-year payback period on a $10,000-$20,000 asset with a warrantied life of about 10 years may not be a great deal. (At the 2017 All Energy Australia event, which is a mecca for ‘new energy’ types, expert commentators were talking up 500,000 to 1 million home batteries by 2020, but that would be heroic given current sales falling way short, even if new state and federal incentive programs and subsidies continue to be announced.)
Don’t get me wrong. I’m not anti-batteries. Nor anti-VPPs. I just see that there is an enormous amount of much lower-cost, less-engineered solutions that better energy data and more consumer engagement can deliver while we wait for battery prices to come down and their performance to go up.
The consumer conversation around energy is evolving
Pretty much wherever I go these days the subject of managing household and small business electricity is likely to come up. This could happen at my kids’ schools, a family-and-friends barbecue, or in key business meetings with customers or investors, and in many other contexts too.
When it does come up, I go straight to my own experiences as a consumer. Not that I am claiming to be your average consumer, whatever that might be?
In fact, I happen to believe that if there are approximately 10 million homes, businesses and other sites in Australia with utility head meters to bill them for electricity, then we’ll need to have roughly 10 million different solutions if we want to make everyone truly happy.
This notion of customising solutions for every consumer is anathema to how the energy sector currently works, although it’s business as usual for many other sectors in the digital age.
For electricity, in particular, the prevailing assumption is that all residential and small business consumers, which is most of the marketplace in headcount terms, will get an overwhelmingly standardised experience – varied only by frequent tweaking at the edges thanks to an increasingly confusing array of alternative tariffs (i.e. ‘plans’ in telco terms).
This is why, for example, we persist with the delusion that an already-outdated piece of technology that we call a ‘smart meter’ is the gateway to some spectacular digital revolution for energy consumers. Quite the reverse, it’s mainly just a pathway to utilities trying to keep control of the system in the 21st century in much the same way as they did in the 20th and 19th centuries.
When it comes to smart meters, I should know. I have history.
As a former global information technology executive with the world’s leading smart meter manufacturer, Landis+Gyr, I’ve done more than most people on the planet to promote the rollout of that technology dead-end.
At the time I was most involved, in the mid 2000s, we believed that smart meters would make the whole electricity system future-ready. But we were wrong, partly because we overestimated the technology itself, but mainly because we didn’t see the speed and scale of the wider technology revolution that has accelerated in the 15 years since, across the global economy, and now is impacting on the energy sector as well.
When you have the Internet of Things (IoT) exploding, and machine-learning and Artificial Intelligence (AI) on the rise, including many energy-related applications, then smart meters that mainly still only deliver 30-minute data the next day don’t look very cutting edge, if they ever were.
So what does my experience as a consumer tell me?
A few years ago my family built a new house and we put 10kW of solar PV on the roof.
Naively, I thought that would do it, that we’d wiped out our power bill; and that we could look forward to a rosy future of minimal electricity bills from our retailer, and through them our network company, thanks to low-cost clean energy being generated from our own rooftop whenever the sun is shining. The kids quickly decided they could max out on running their devices: ‘Dad, it’s free from the sun!’
Our big reality check came when we started getting power bills for the new house averaging around $500 a month. Unlike many people, we can afford that, but the implication was that our substantial investment in solar PV was a dud. It wasn’t, of course, it’s just that we hadn’t done the homework to get smart about how we ran electricity consumption in our new home, to maximise the use of our lower-cost home-generated solar power, and minimise the higher-cost power we were importing from the electricity grid.
None of this meant sacrificing any of our quality of life, which to us is non-negotiable. We just had to be smarter about how we used electricity.
This is when we discovered that the current energy system doesn’t provide us with anything like the data that we need to optimise our own solar consumption, even with smart meters (i.e. monthly or quarterly bills in arrears, often only estimated rather than actually meter-read, and entirely inadequate when compared with the contemporary consumer experience for telecommunications, or even just operating a motor vehicle).
Confronted with this challenge for my family, that’s when I sought out Wattwatchers, which happened to be running a pilot project with my local council in the northern suburbs of Sydney. It wasn’t the plan at the start, but I’ve ended up becoming the CEO of Wattwatchers to lead its national and international growth strategy – which is all about empowering consumers with the real-time energy data and choice of solutions to put them in control, instead of being over-reliant on utilities and ‘the system’.
Nowadays, our household electricity has dipped as low as $107 a month, and averages around $200, which means my solar investment is paying its way. The highly-granular, circuit-level, real-time data from Wattwatchers played a major role in helping our household to achieve this new, better balance.
Then, last year, I had another big wake-up call thanks to our home now bristling with Wattwatchers devices, for monitoring, analysing and controlling many aspects of our electricity. Some of our main appliances, the oven and a clothes dryer, stopped running. By using the Wattwatchers monitoring, I was able to see that one of the phases on our 3-phase power supply was dipping down to 180 volts, when it is meant to be 230 volts ideally, and at least within a band of 218-253 volts.
Voltage variability is a power quality issue, as a recent ABC-TV 7.30 story highlighted, but what I discovered is that the network businesses that maintain the electricity system poles and wires – and are meant to make sure we get the power we need (for which they are well paid) – in fact have chronically poor visibility of and control over their low-voltage networks, which is where the vast majority of end consumers are operating.
In my case, the local network company serving me had no idea that there even was a problem, although as I discovered the fault was coming from the network company’s street transformer and must have been impacting other homes in my area as well.
So, in short, the people who get paid to run the electricity system don’t have the data they need to do the job properly. The people who bill us for electricity don’t have the data they need to do a better job of it. And most of us as consumers don’t have the data we need to see how the system is failing us, and more importantly to do something about fixing it ourselves.
So how do we fix this?
For my part, as a mad-keen home technology enthusiast, I’d love to build on my family’s rooftop solar investment by adding a battery-based home energy storage system, and moving on to an electric vehicle as well. I’d also love to share the excess solar my home generates most days with my mother, who lives in Brisbane on a pension, but of course the rules, regulations and market practices that govern today’s electricity system don’t allow it.
Apart from the obsolete regulatory system, and therefore the marketplace it mandates, what holds me back is basic financial analysis. Like many people, I won’t invest when the return on investment is really poor. Even if I really want something for non-financial reasons, including just because it’s cool.
My reluctance to rush in on the battery hype speaks to a much bigger issue for the rise of distributed energy resources (DERs), and especially adding batteries to solar PV systems, which brings us back to the hot topic of virtual power plants, or VPPs.
In my personal case, I will take a lot of convincing to allow an energy company, or anyone, to control my battery system, or my air-conditioning, or pool pump, or anything else in my home – assets belonging to me and my family, and affecting how we live day to day – without some serious incentives, and very clear guidelines and limits.
Working out the right commercial models to negotiate a workable balance between consumers and VPP aggregators, most if not all of which are likely to be electricity retailers, is going to be a major focus for the whole energy sector* in 2019, and most likely for several years after that. It’s not easy, and it will take time.
The world’s leading battery and VPP operating system providers are congregating in Australia, looking to stake out leadership positions in the world’s hottest market for residential-level distributed energy resources. I won’t name names at this stage, but some contenders already have failed to crack the challenging ‘global testbed’ market, even at pilot stage, and have gone home with their technological tails between their legs.
Wattwatchers will have a lot more to say in this space in the months and years ahead, as we bring more of our own intelligent energy solutions to market, and also help to enable our commercial partners, local communities and individual consumers to shape their solutions.
We don’t pretend to know all the answers yet, but we’re highly committed to working across the electricity system – including with both the industry and consumers – to find models that can work for a new era, one in which data genuinely empowers end consumers to take charge! One in which net zero energy homes become commonplace!
*Key initiatives announced in 2018 include the cross-industry Distributed Energy Integration Program (DEIP), led by the Australian Renewable Energy Agency (ARENA), the Australian Energy Market Operator (AEMO), and the Australian Energy Markets Commission (AEMC); the AEMO VPP Demonstrations (consultation now underway); the NSW Smart Energy for Homes and Businesses Program (at Expression of Interest stage); and the Open Energy Networks process, spearheaded by Energy Networks Australia (ENA) working with AEMO.
Gavin Dietz is CEO of Sydney-based Wattwatchers.