In theory any company can sell you electricity, as long as they purchase it from generators in the wholesale market, and as long as they pay a transmission and distribution fee to the network operator. Electricity can also be bundled with other services such as natural gas, potable water, telephony and Internet connectivity. Dealing with a single provider for all these services would be far simpler than the separate structure that is currently used.
However, there are legal barriers to overcome before the concept described above is possible. Governments must give authorization for these private companies to purchase electricity, water and natural gas and resell it to individual homes and businesses. It would also be necessary to reach an agreement with the companies in charge of operating the power networks, gas distribution lines and potable water piping. This infrastructure has operation and maintenance costs that must be covered, and the simplest solution is adding them to the price of a multi-utility service offering.
Giant tech companies are in the best position to become multi-utility retailers, for two main reasons:
A company operating like this could be called a smart multi-utility retailer. They can be considered smart because the service offering is based on data analysis after observing customer habits, and custom-tailored for each building.
Although there are innovative possibilities with all types of utility services, this article will focus on the electricity sector, and how a multi-utility retailer could interact with residential and commercial solar power systems.
Conventional energy retailers normally offer you several tariffs, and your electricity bill can vary dramatically depending on which one is chosen. However, tariff descriptions tend to use plenty of technical language that is not common knowledge outside of the electrical industry. For users from other professional backgrounds, this provides choice but also causes confusion.
A multi-utility retailer can gather data on how a customer uses home appliances, observing both electricity and gas consumption. This data can be used to determine which combination of electricity and gas tariffs yields the lowest total energy bill, and that service package can be offered. In addition, thanks to artificial intelligence and big data, this process can be automated completely.
Homeowners and businesses can also provide their multi-utility retailer with access to their building systems and appliances, allowing remote control to optimise power grid operation. For example, it may be possible to switch some electrical loads off during peak demand hours, helping customers avoid the highest electricity tariffs while decongesting the power network. In the case of companies, this remote control feature can also be deployed to reduce internal peaks in consumption, which lead to hefty capacity charges in companies consuming more than 160,000 kWh per year.
When commercial solar power and energy storage are considered, the possibilities are very promising. A smart electricity retailer could offer a program where these distributed energy systems are synchronised and managed together as a virtual power plant, which simulates the behavior of a physical power plant by coordinating multiple small systems. For example, the total electricity storage capacity can be coordinated to absorb surplus energy generation and to mitigate peaks in consumption.
Electricity generation in Australia is not expensive, strictly speaking. However, kilowatt-hour prices for homes and businesses are among the highest in the world once you add network and retail costs. Network costs have increased due to large-scale upgrades for transmission and distribution lines. The media often describes the Australian power network as “gold-plated” due to how expensive it has been to build and operate.
Network upgrades are needed because overall power demand is always on the rise. However, keep in mind that the maximum demand of the year only occurs during the hottest days of summer when most buildings rely on their air conditioning equipment. On a daily basis, peak demand tends to occur after sunset, when most of the population is returning home and precisely when solar power systems have stopped generating electricity. If these peaks in demand can be kept under control, expensive grid upgrades can be delayed, which leads to a reduction in network costs.
A smart utility retailer can take advantage of their close relationship with customers, managing both demand and distributed energy resources to prevent peaks in the transmission and distribution burden. Commercial solar power systems with energy storage can become very valuable assets, since they can adapt to almost any rooftop that is not covered by shadows. There are two main approaches to mitigate consumption peaks:
A similar approach can be applied for other utility services such as drinking water or natural gas. Consider that the capacity of a distribution system is determined by the maximum demand it can expect, not the average demand. If peaks in the consumption of any resource are minimized, it can be distributed with a lower network capacity. In practice, this means using smaller transformers for electricity, smaller pumps for potable water, etc.
Smart multi-utility retailers can use data analysis to obtain a detailed snapshot of how each home or business uses utility services, and how different services interact. For example, domestic hot water systems use both the potable water supply and either the gas or electricity service, depending on what type of heater is used. This approach would allow an optimised service offering for each client, combined with automatic controls to make each utility service as efficient as possible.
Distributed generation systems such as commercial solar arrays could gain increased importance as the structure of the electricity sector changes, becoming resources that can be actively managed to maximize their value. Their energy output can be stored automatically to be used when it provides the greatest benefit, which is not always at the time when it is generated.
Cameron Quin founded, grew and sold two online companies from 2012-2014 whilst playing a key role in doubling the total profitability of two other brick and mortar businesses during the same periods. On top of lecturing at AIM University, Cameron has mentored over 400 business owners within the highest regarded private business education company in Australia with extremely positive results. Cameron has extensive experience in the systemisation, automation and scaling of business operations.