Will the tech giants become electricity retailers?

Looking five years ahead, expect new players such as the tech giants to enter the electricity retail sector, says TSO chief Ben Voorhorst.
Published: Thu 22 Feb 2018

With the energy sector fast changing and new players entering as the market decentralises and new service opportunities emerge, what types of companies might be expected to enter within the next five years?

Customer centric approach

In the view of Ben Voorhorst, COO of the European transmission system operator (TSO) TenneT and President of the TSO body ENTSO-E, they are likely to include tech giants such as Google and Facebook, which already have a strong ‘customer centric’ outlook.

“I would expect companies from a different scenery which have a close relationship with customers,” he says. “Automotive could be one, others could be Google or Facebook. Customers have chosen them, maybe not even paying for their primary product, and taking that picture to the energy business one would be surprised at what could happen.”

When approached by Engerati, Google declined to comment on whether the company is targeting electricity retail, while Facebook’s Ime Archibong said: “this currently isn’t an area of interest to us.”

Growing the smart home

Besides the strong customer relationship, another approach such companies could utilise is the smart home.

Consider Amazon, another potential entrant, which with its voice assistant Alexa is making strong inroads into the smart home space.

According to Juniper Research in its commentary on the consumer electronic show CES 2018, “Alexa (was) one of the biggest talking points at CES”. Now in some 4,000 products, it is the most widely integrated voice interface. Perhaps not for long, however.

As Delta-ee’s Matti Kahola writes in an Engerati blog on the event, “Google went all out at CES this year with its marketing for the Google Home smart voice interface. This is a strong sign that Google will look to fully challenge Amazon Alexa in the smart home voice assistant space in 2018.”

This is a stark contrast to last year’s CES when Google Home was nowhere to be seen, he notes.

Bear in mind that Google also has other interests in the home energy space in the form of its Project Sunroof, which uses its mapping tools to enable users to calculate the energy potential of their rooftop. Initially focused on the US, the tool is also available through E.ON in Germany.

Renewables opportunities

The third area of opportunity these companies have is their pursuance of renewable generation. As high profile companies and large energy users with data centres to run, all have made public 100% renewables commitments, either through the RE100 initiative or independently.

To achieve this the companies are either sourcing renewables via long term power purchase agreements or acquiring or even developing their own projects. Among the companies, Google was set to reach 100% for its operations in 2017, although such an achievement hasn’t been announced. Apple already has become a retailer in the US, with a 25-year power purchase agreement with Salt River Project.

With these backgrounds, and especially with a surplus to requirements, it wouldn’t take much of a stretch to look to consumer retail.

The digital utility

Nor should the absence of a physical infrastructure necessarily be a concern. US blockchain startup Grid+ is developing the concept of the digital utility, aiming to significantly reduce energy costs by eliminating the typical retailer overheads. The concept is still to be proven and application for the first of these in Texas is pending with the state utilities commission.

With concepts such as these by companies that didn’t exist using technologies that were virtually unknown five years ago, little wonder the future becomes hard to predict.

Nevertheless, Voorhorst is clear on one thing: “We need to make these things possible.” Referring to the case of flexibility, he says: “We as TSOs together with the distribution operators have to make possible that everything that can be is activated to help the energy system. We need all the companies that can help us with that.”