Levelling the Retail Electricity Playing Field

Steve Hoy
Steve Hoy
Sep 4, 2018 · 4 min read

Enosi’s disruptive business model has benefits for all the participants in the ecosystem. Our fundamental concept is to separate the wholesale and customer facing functions of today’s retail suppliers. This creates opportunities for new entrants (we call them neo-retailers) to take on the customer facing role using the Enosi platform to support their energy-related products with metering, billing, trading and settlement services.

But what of the licensed retailer in the model? The Enosi model requires a licensed retail supplier to meet the regulatory requirements for each grid connected customer, and to buy/sell the unders and overs (energy not traded within the communities). These smaller retailers are often motivated by social factors such as environmental concerns and community engagement, but will always need to put forward competitive product into the retail market. So how does Enosi’s model lower the barriers to entry and establish on-going competitiveness for these small retail players?

First up, let’s define what we mean by a level playing field. Ideally, we would aim to directly neutralise all the advantages enjoyed by large scale retailers. That might be a bit of a stretch (some things like having the capital to buy your own generation fleet are tough to overcome!) but Enosi provides several other benefits that can compensate, and we believe the net result of these factors will be enough to let small retailers compete effectively.

In a 100% fair and efficient market place, small retailers would be able to access wholesale electricity contracts at prices no higher than those of the large players. In reality this will require the advantages of scale to be neutralised. Such advantages include:

1. Ability to offset wholesale risk through generation portfolio

2. Flatter and more predictable load profile of their aggregate customer load

3. Lower (proportionately) working capital requirements (such as prudential deposit requirements and risk capital)

4. Lower per customer transaction and processing costs

5. Lower per customer insurance costs.

While the Enosi model can’t eliminate all of these advantages, it can enable a few counterbalances of its own. The table below lists these factors.

Enosi aims to help small retailers adopt its leveraged retail supply model through a combination of superior low-cost retail software, mitigation of business risks through Enosi’s unique staking model, and access to new ways of retailing energy. They can look forward to growth in their customer numbers by teaming up with other commercial innovators offering energy as part of their product and services — differentiating beyond the simple price of a kilowatt-hour.

· Tapping into the distributed, clean energy wave.
Enosi’s model is designed to encourage and favour businesses promoting and communities adopting new decentralised energy technologies such as rooftop and shared solar schemes. Growth rates in these sectors outstrip the broader market.

· Wholesale market risk mitigation
While neo-retailer customers and community members will be able to trade energy between themselves, they also provide the licensed retailer access to renewable and battery stored energy at whatever default rate they choose to offer. More importantly, by serving and combining different communities the retailer may be able to smooth out his aggregate load profile. For example, a school’s power consumption is through the middle of the day, while the parent community tends to use power before and after these hours.

· Low-cost full stack retail software platform
As the Enosi platform is built out, retailers may choose to utilise the software to automate their meter data management, billing, settlement and customer service functions. Enosi is confident that the transaction costs of using the platform will provide an advantage over even the very largest scale utility billing systems used by large retailers.

· Neo-Retailers to do the selling
The Enosi model enables all types of organisations to become neo-retailers. From the licensed retail supplier’s perspective, these entities become low-cost channels to market. As the neo-retailers recruit customers to their communities or commercial services, the licensed retailer benefits from the growth in volume. Furthermore, customers attracted to the community-based scheme or to a bundled energy service offering are far less likely to churn away, reducing cost of retention for the retailer.

· On-going innovation
By providing the way for any organisation with a compelling customer idea to effectively become an energy neo-retailer, Enosi has opened the door for innovation to sweep across the power industry. Already our organisation has been swamped with companies and communities seeking to innovate — from solar installation and service groups, through schools and sporting organisations, commercial cooperatives, local government groups, green energy investors, electric vehicle services and more.

Licensed retailers working with Enosi stand to benefit in a multitude of ways — more than enough we believe, to compete with the incumbent oligopolies in the retail electricity sector. With its world-leading blockchain technology, Enosi has opened the way to true transformation of the retail electricity sector.

Enosi

Enabling access to #renewable energy for everyone

Enosi

Enabling access to #renewable energy for everyone, tracing energy to its generation source 24/7 and settling renewable energy right on the retail bill.

Steve Hoy

Written by

Steve Hoy

CEO of Enosi Australia— leading a transformation play in the electricity industry, providing traceability technology to enable access to wholesale renewables.

Enosi

Enabling access to #renewable energy for everyone, tracing energy to its generation source 24/7 and settling renewable energy right on the retail bill.

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