Creating a distributed energy market requires a lot of thought, a little bit of daring, and tremendous peace-keeping skills — as shown in New York’s Reforming the Energy Vision (REV).
But more than anything else, a distributed energy market requires customers. Customers who know they are customers. The kind that stand in line at grocery stores or frequent the Amazon.com shopping cart.
The highly regulated electric utility industry doesn’t have this kind of customer. Its customers are the passive sort. We not so much buy, as receive electricity. We think it comes from our walls. As a result, it’s a product that we take for granted and use indiscriminately — which leads to waste.
So ultimately after all of the tariff changes, platform innovations, and new acronym formulations — all of the work to build the new distributed energy market — today’s energy reformers must wake up this Rip Van Winkle customer. They have to point him, tottering and groggy, to the store — to the microgrids, community solar, learning thermostats, and other products entering the market. And they have to show him their value.
It’s not going to be easy. And it’s where innovators need to focus next.
That was an underlying message delivered last week by policymakers and innovators participating in REV4NY Exchange, a state-sponsored conference that drew 350 people to New York City and 1,700 online viewers from around country.
“What do we need to do to make it very easy for consumers to transact? And what do we have to do to make it very easy for distribution energy resource providers to find consumers?” said Audrey Zibelman, who chairs the New York Public Service Commission and is a chief architect of REV.
Amazon and Apple Style
The state has been mulling the idea of an Amazon.com-like portal where consumers could purchase distributed energy products. But ultimately, Zibelman sees private companies, not the state, waking up the customer.
“Regulators are really, really lousy at marketing. We really don’t understand the customer. We think about things in very big flavors: vanilla, chocolate and strawberry. That’s about as exciting as we get. Utilities are a little better. “But,” she added, looking at the utility representatives in the audience, “I can tell you guys, you’re not that much better.”
The distributed energy market requires Apple-like marketing, she said. It needs an infusion of whatever it was that got her sucked into purchasing a smart watch and two smart phones. It also needs regulators and monopoly-style utilities to step aside.
Watch video of the REV4NY Exchange here.
“It would be silly for me to sit here and identify what’s going to get a customer engaged. What I need to do is get us out of the way, and get the utilities out of the way, and give vendors an opportunity,” she said.
The private vendors are quickly stepping up to the plate with demonstration projects and utility alliances. Several spoke at REV4NY and reported on what they’re doing and what they need from policymakers to do it better.
Offering enchanting and useful distributed energy gadgets is one way to draw in customers. But when customers wake up, it’s often pain that rouses them.
Donnel Baird, founder & CEO of BlocPower, described getting a phone call from his favorite pastor in Brooklyn, who said his church’s energy bills were gobbling up one-third of the congregation’s revenue. The story is a familiar one in low-income communities and creates an opportunity for the new distributed energy entrepreneur with a solution, according to Baird.
“You see these communities reaching out for help. There is deep mistrust of financial institutions, and unfortunately, energy service companies. And utilities poll lower than President George Bush in many communities. So how do you navigate that mistrust in order to get something done?”
Monetizing the benefits of distributed energy
Another big problem: How do private distributed energy companies get paid for what they offer in an industry that relies on utility billing? Microgrids, solar plus storage and similar technology brings reliability and resiliency to the grid and the consumer. It keeps the lights on during a grid disaster. But that benefit has yet to be monetized. Industry insiders are floating ideas for tax credits, incentives, or utility tariffs.
But will customers balk at the idea of being charged for reliability?
David Hebert, director of business development for Sunverge Energy, pointed out that many already do pay to keep the lights on during a disaster — but they do so privately.
“They pay for resiliency in the form of natural gas generators, in the form of small generators from Home Depot,” he said.
Some are more receptive than others — especially if they’ve seen what loss of power costs them.
Vic Shao, founder & CEO of Green Charge Networks, said that Walgreens became a customer following the massive outages caused by SuperStorm Sandy in New York. The company now sees the value of resiliency to keep its cash registers running during a crisis.
Richard Kauffman, chairman of energy & finance for New York, and another chief REV architect, gave the industry a challenge.
“If we start from the customer and work backwards there is a lot of value to discover,” he said. “So we want you to think big in the next set of REV demonstrations.”
It’s a good mission. After all, a market without a customer — or one barely awake to the opportunity ahead — is no market at all.
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