Do you remember the first time you heard about the sharing economy and how it would disrupt everything? For me it was at an energy workshop in the Bay Area several years ago.
At the time, the idea seemed very abstract. I had worked closely with cleantech companies like SolarCity who were implementing innovative financing models, and I knew traditional utilities were becoming uneasy about the popularity of distributed energy resources.
Still, energy felt like a difficult thing to “disrupt.” The energy sector has long been dominated by big, conservative industries with billions of dollars in physical assets. These industries reliably deliver a commodity that (at least in the industrialized world) is not a “nice to have” but an absolute essential to everyday life and business. Was the energy system something we even wanted to disrupt?
Fast forward to today. A hot phrase right now is “energy services.” This term used to refer to a narrow set of energy companies (ESCOs) that helped clients design and retrofit facilities to be more energy efficient and save money. But increasingly, new energy services companies are thinking much broader: microgrids to boost resiliency; lighting-as-a-service (LaaS); crowdfunded community solar; the energy cloud; even blockchain technology.
Individually, these services may be unremarkable. But collectively, they have the power to change the way we think about energy.
Recently I was at the VerdeXchange conference in Los Angeles, at a panel put on by the LA chapter of Young Professionals in Energy (YPE) entitled “Renewable Procurement: Disruptive Financial Models.” An alphabet soup of approaches were discussed: ESPCs, QECBs, REITs, and OBF.
Here’s the exchange that stood out to me. An investor on the panel described a financing product he had helped develop — one that takes a new approach to underwriting and a more holistic view of projects. In describing it he asked, “what if your equipment always stays new?” Meaning, what if you paid for a level of service rather than a piece of equipment that requires ongoing maintenance and eventually must be replaced. There were a lot of skeptical responses to this proposition — a lot of (perhaps legitimate) reasons why the approach wouldn’t work.
A strong or negative first reaction to new ideas is normal. No! That won’t work because that’s not the way we do things! New ideas, new models, and new technologies have something in common — they all require experimentation. Experimentation can be uncomfortable because it challenges our established beliefs and the outcome is unknown.
It’s worth paying attention to first reactions because they often highlight where there are real risks associated with change. But what if acknowledging those risks was the beginning of the conversation rather than the end?
Back to the question I was asked to consider years ago. What if the sharing economy could disrupt energy? The answer is, it already has. How successfully will depend on our ability to have an open mind about the future of energy itself — not as a commodity, but instead as something completely new.