Utilities

The business models disrupting the energy and utilities market

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February 9, 2023
Energy business models are being disrupted by forward-thinking startups who are transforming the way energy services are delivered.

As customer demand for energy evolves, an increasing number of companies are using emerging technologies to further decentralise the way energy is generated and distributed.  

In recent years, we’ve seen the evolution of digital, integrated and dynamic energy ecosystems. These models support two-way power flows and provide end users with more choice and flexibility in an uncertain global market.

What makes the energy industry attractive?

According to the International Energy Agency’s (IEA) most recent World Energy Investment report, global energy investment increased by more than 8% in 2022, to reach a total of $2.4 trillion USD.

Investment is increasing in all parts of the energy industry, with a particular boost from the power sector as businesses invest in renewables and grids to improve end-use efficiency.  

One of the key drivers behind energy investment is the rising demand for clean energy. As political and economic pressures grow for countries to meet the objectives of the Paris Agreement, more businesses are seeing opportunities to invest in renewable technology and decentralise energy systems.  

Data automation

As the smart meter rollout continues across Europe, the European Commission (EC) predicts that 77% of European energy consumers will have electricity smart meters installed by 2024. With these installations, comes an abundance of data that’s being leveraged by innovative businesses.

For example, ‘open data’ business models like those used by price comparison sites are helping consumers find better energy prices. Some startups are mining customer energy data to tailor adverts for niche energy products and services. And others are adopting new brokerage models where energy data is bundled with other household data to enable even more targeted advertising.  

One startup that’s using data automation to improve energy efficiency in public and commercial buildings is Finnish SaaS company Nukka Solutions. The company’s platform automates data collection from energy meters, to optimize building energy systems, as well as heating, ventilation, and air conditioning systems (HVAC).

And it isn’t just startups who are using data automation in this way. Google, for example, has its Nest Renew intelligent thermostat, which automatically shifts usage times to when the grid is cleaner. Using its Clean Energy Match technology, the thermostat can match the fossil fuel electricity used in homes with enough clean energy to cover the average household. In turn, customers save money by reducing their consumption at peak times.

Peer-to-peer trading platforms

The peer-to-peer trading model uses online marketplaces where consumers and energy producers can trade power without the need for an intermediary. This business model empowers both individuals and communities to take control over their energy-generating assets. 

For example, the Australian company Powerledger, provides a peer-to-peer marketplace for renewable energy and aims to democratise energy using blockchain technology.

The platform’s track and trade feature give consumers choice over the energy they’re using and empowers them to participate in peer-to-peer trading with excess solar in the grid without subsidy.

The company also has an energy marketplace called Marketplace for Optimisation of Distributed Energy (MODE), which enables Distributed Energy Resource (DER) owners to provide grid services to monetise their assets.

Storage-as-a-service

According to a recent report from Bloomberg, energy storage installations around the world are projected to reach a cumulative 411GW by the end of 2030 – 15 times the 27GW of storage that was online at the end of 2021.

To help individuals and businesses access energy during off-peak times, a number of companies are using artificial intelligence to dispatch and reconfigure customer-sited batteries without the need for manual intervention. Automated processes handle tasks like turning off heating, ventilation, and air conditioning systems and lights. 

For example, software platform, Stem adds battery storage to solar, wind, electric vehicle (EV) charging and other renewable energy projects to increase company revenues. By discharging energy when its most valuable, battery storage creates flexibility for customers and saves them money.  

Stored energy from renewable technology is released during peak times, which reduces demand charges and enables independent power producers to earn wholesale market revenues.

As governments continue to encourage the purchase of electrical vehicles, several large car manufacturers are also becoming more involved in the energy storage market.

Companies like Nissan are using their manufacturing capabilities and moving into selling home storage units for electricity, similar to an EV battery. For those with solar panels, the units will allow people to consume more of their own electricity, further reducing the market for traditional energy companies. 

Pay-as-you-go (PAYG) schemes

Pay-as-you-go schemes are making renewable technology more affordable for individuals and businesses. By removing the burden of having to pay upfront costs, this business model helps people access clean energy quicker.

PAYG schemes are especially effective in rural communities and are becoming increasingly popular in countries like Africa, where energy access rates are low. Uganda-based ENGIE Energy Access, for example, provides solar systems to households, farmers, and small businesses. To date, the company has transformed more than 9 million lives across 9 countries.

Similarly, cooling-as-a service makes clean and efficient cooling technology accessible to those who can’t afford the upfront cost of equipment. Customers pay a monthly fee based on the amount of cooling they use.  

India-based company, CoolCrop provides off-grid solar powered refrigeration to farmers who don’t have cold storage resources. To date, the company, has installed 48 systems across 7 states in India, and increased farmers’ income by an average of 35%.

What does the future hold for these new business models?

In recent years, the traditional energy company has faced increasing competition from forward-thinking software, automotive, and fintech companies. Driven by the decarbonisation agenda, these companies are changing the way we access, consume, and pay for energy.  

Digitisation has given way to the rise of a more consumer-centric market, and despite rising energy prices, customers are gaining more control over how and when they use energy.

Over the coming years, traditional energy companies could find themselves losing out to peer-to-peer marketplaces, where user-generated power and smart algorithms handle distribution and payment.

Energy companies therefore need to be asking how they’ll generate revenue in the future, what services they will provide, and how will they adopt a consumer-based approach. As global energy regulations become tighter, companies will need to innovate in order to keep up with these new business models.  

Whereas, large energy companies have traditionally controlled the market (and the cost of energy), it may not be long before smaller companies with the speed and agility to innovate will dominate niche corners of the market.

How triPica’s disruptive ERP platform can help energy companies evolve their business model

At triPica, we enable utility companies to deliver a fully digital customer experience and regain agility. Companies can manage their whole supplier lifecycle using digital technology, while retaining complete focus on the customer.  

Our Enterprise Resource Planning (ERP) platform enables suppliers to adjust monthly payments with usage graphs and raise bill alerts to anticipate any unexpected high consumption. Consumers also benefit from being able to access all their energy usage and billing information from a single app.

We helped German utilities company Enercity disrupt the market by providing innovative offers through a completely new digital sales platform. We also helped them migrate hundreds of thousands of customers to the triPica platform.  

With triPica, energy suppliers can expect to decrease their cost-to-acquire by up to 50%, while increasing acquisition rates. Likewise, churn rate can be reduced by up to 67%, while encouraging customer loyalty, and cost-to-serve can be reduced by up to 60%, resulting in greater profitability.

Find out more about how triPica can help your company regain agility with our ERP platform technology.

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