The future of energy consumption
There are so many startups making a play for blockchain within the energy industry, Green Tech Media have identified and are tracking 122 of them. It seems about a quarter of these organisation are chasing the peer to peer trading of energy, frequently targeting individual consumers as “traders”. I have also been watching this market for a little while now and I still don’t quite get it. Yes, there’s great opportunity and I do believe ultimately consumers must be economically encouraged to generate & store for their own consumption and sell capacity in a market but direct consumer peer to peer trading?
Let’s look at the UK market, in 2017 we — through enormous media efforts — finally saw a material increase in consumers switching energy suppliers. A facility that was created back in the 1990’s and now takes 5 mins for a consumer to initiate via a market comparison website. This 5 min activity can potentially save them 30% of their energy bill, but the majority of consumers simply don’t do this!
With this in mind let’s look at peer-to-peer trading. In many of these cases the consumer is expected to invest in generation assets, invest in storage assets AND understand the market (that doesn’t exist yet) well enough to know if they want to sell at 8p per kWh or buy at 6p in order to recover the cost of the assets and improve their energy costs? This will require an exponential increase in engagement from the consumer that I’m not seeing. However, I do believe “trading” still needs to happen, but it’s more likely going to happen through intermediaries and community schemes. Something the consumer becomes part of, and energy is managed on their behalf, probably within a larger group.
So when the regulator asks what does the future energy supplier look like? I say it is these groups and communities (yes there still could be a community of 1 for the really active consumers). The groups that act on behalf of the consumer, optimising their energy consumption, deploying (and financing) generation and storage assets together with the consumer that can sustain the community. They will provide effective and automated trading mechanisms that exchange energy within the community, with other communities and back to the national energy reserves. Blockchain technology maybe a great technical platform for how this new paradigm is enacted but let make sure the model is viable before the technology is selected. I also hope that (and we already see the beginning of this with Bristol Energy and Robin Hood Energy) the new suppliers will strive for even greater socially responsibility with community initiatives to combat fuel poverty and other challenges.
Let’s hope “Energy Supplier 2.0” will look something like this.
Matt Roderick, Head of Wondrwall Energy and founder of n3rgy