What can energy providers and consumers learn from the cellphone business? There are some interesting parallels that can offer some clues to the future of energy services and how they are priced and delivered.
At Edison Energy’s launch event in March, National Renewable Energy Lab director Bryan Hannegan observed that the way energy services have traditionally been marketed is much like the “bad-old-days” of paying for cellular phone service by the minute. He challenged anyone in the audience at University of California, Irvine to raise their hand if they still had a by-the-minute plan — and no one did. “If you believe the trend that we’ve seen in telecommunications and in other industries is coming to the energy sector, then I would say the market potential is rather huge.”
It’s a great sound bite, but what has changed to make Energy-as-a-Service as desirable as flat-rate unlimited data plans?
Not so long ago, electricity consumption was a one-way street. The utility supplied the power and customers consumed it, paying by the kilowatt hour. Unless you operated your own on-site generation, there weren’t many options.
The mobile phone corollary is that not so long ago we relied on our phones only for making calls. Then smart phones happened, and now our “phones” have replaced desktop computers and we rely on them for data service as well as voice. But, however you use your phone, you can find a plan that suits your needs.
The growing complexity of the new energy world — with demand-response programs, distributed energy resources like solar and battery storage — are leading customers to demand stable pricing based on their enterprise needs and an Energy-as-a-Service model for their energy use. This is particularly true for businesses operating in multiple locations or states. They want energy management to be simple, much as fixed-rates plans made cellphone service simpler.
The cellphone-energy metaphor goes only so far however: Despite the convenience of current fixed-price phone plans, most people are paying more for their mobile phone service than they did under the old plans. In contrast, Edison Energy’s primary goal is to decrease overall energy expenditures, provide insight to large company’s energy managers, and help them integrate their energy operations to save money.
But just what are the potential savings? “Energy expense is something that people are not adequately exploiting,” said Chris Hayes, managing partner of Altenex, one of four companies recently acquired by Edison Energy. In essence, if you decrease the cost of energy, that savings drops to your bottom line and raises your net income. And since energy costs are generally some of the largest expenses of companies, the potential savings are equally large.
At this point it is unclear how energy-as-a-service will be bundled and priced, however the goal for Edison Energy is to make energy services simpler and less expensive for customers.