Utilities: to control or not to control

Image credit

As consumers we’ve pretty much always been controlled by our energy company. Sure, we can switch retailers but essentially they just send us a bill. Conventionally our meters were read four times per year which resulted in very coarse billing, but we still had no choice but to fork out whatever figure appeared at the bottom of the bill.

Similarly for utilities, they had very little to go on for how much energy we would use in the future and, more importantly, when. A good example of this is when low cost air conditioning systems hit the Australian market. Air conditioners are, by a considerable margin, the most energy hungry appliances in our homes. Suddenly there was a massive increase in consumption in the summertime and our networks had to be built up to handle it. Networks (such as Ausgrid, which was recently auctioned for $16 bn) get a regulated return on their infrastructure, so building new network to add to their asset base was not a problem. It simply meant their asset base was more valuable! This led to the ‘gold-plating’ of the grid which many consumers are furious about. This discontent is understandable because gold-plating drives up energy costs for everyone — you don’t ask your barber if you need a haircut!

Now, to overcome these high energy costs — amongst other reasons — many have installed “behind-the-meter” resources such as rooftop solar. This works really well to reduce your own energy consumption during the day when the sun’s out but it does little to relieve the network problem, since the solar panels are rarely producing a lot when the network needs it.

Image credit

We know batteries are getting more and more cost effective, as Grant wrote about a couple of weeks ago but this doesn’t solve the utility problem, since people currently want batteries to take as much of their consumption as possible off-grid. And in some areas solar actually causes slight grid instabilities which need to be fixed by the utility, whilst the cost to achieve this is recovered from all energy users. For this reason, networks are looking to control behind-the-meter resources to manage the grid better through changes to the Australian Standards for solar and battery systems. This will allow them to send a signal to reduce your solar system’s output or discharge your battery without you even knowing! Effectively, they can “break in” to your house and control devices which you’ve paid for. When we have a clean and cheap energy resource like solar it is absolutely ludicrous to be capping production if we don’t have to. This reeks of heavy-handed bureaucracy. Here at Nexergy we believe there is a better way.

We need a more customer friendly way to access these behind the meter resources. Nexergy is developing a technology which is essentially an “invitation” from the owner where they get an incentive from the utility for the use of their distributed energy resources (DER). The owner retains control and sets the conditions as to how and when this might happen, and at what price. This is a key part of the Nexergy local energy trading platform and allows for a more equitable system for all because not everyone can afford or access DER for themselves. In essence, if we’re going to transition energy to the sharing economy we can’t hand over control of our investments to the utility… but we can allow them access based on our personal preferences.

This transition is coming and the more innovative energy retailers see the writing on the wall. Jim Myatt, CEO of Mojo Power recently expressed his opinions on the importance of customer controlled DER and noted peer-to-peer trading as the means to get there. A handful of peer-based energy trading trials are currently underway to prove the technology and show the customer benefits, so we at Nexergy believe the future of energy looks very bright indeed.