Nowhere else are conditions as ripe for energy disruption as they are in Australia. Chalk it up to some of the most expensive electricity (prices are comparable to Denmark and Germany), the highest penetration of rooftop solar (about one-quarter of households have systems), and a consumer base with a strong interest in self-sufficiency (a recent Accenture survey found that 59 percent of Australian consumers would be willing to invest to become power self-sufficient).
With solar now mainstream, other disruptors loom for Australia’s energy retailers. The country is one of the first markets, along with North America, to receive what could be one of the next big products in consumer energy management: Tesla’s Powerwall residential battery storage system. Agencies like ARENA and investment banks such as UBS and Morgan Stanley expect battery storage costs to fall by more than 50 percent by 2020. A payback period of as little as six to 10 years could prompt high interest from more than 1 million homes.
Although some of Australia’s largest energy retailers were among the first to market with solar offerings, just four years ago many redirected those efforts back to traditional electricity and gas retailing. Ambitious new entrants rushed to fill the vacuum, and the country’s solar installation market is now among the most competitive in the world.
Over the past year, those same retailers have begun seeking growth opportunities from battery storage and other new energy services. They are establishing new business divisions to focus on solar power purchasing agreements, storage options and other innovative products and services. Given how quickly new players charged into solar, it should be no surprise that energy retailers are not the only ones eyeing evolving opportunities in Australia’s energy ecosystem.
Global companies—including Tesla, Enphase and Panasonic—are making big plans to enter the Australian market. New local start-ups, such as Reposit Power, have defined Uber-like business models that enable households to trade their produced energy for a profit at peak times. At the same time, disruptors like the Dutch company Vandebron are making it possible for renewable power producers and “storers” to sell their excess energy to willing buyers—fueling a new breed of “asset-light” market makers that could threaten the entire retailer, generator and distributor ecosystem.
In many ways, Australia’s experience with solar could foreshadow what is possible elsewhere in the world. With ripe economic conditions—mostly due to high power prices and generous net metering tariffs—Australian consumers demonstrated willingness to invest a few thousand dollars for a product that traditionally has had low engagement and interest. Utilities should be wary of being taken by surprise by consumers, especially since Accenture’s New Energy Consumer survey found that more than more than half of consumer around the world are willing to invest to become power self-sufficient, and 62 percent would be interested in home generation products and services, including solar, wind and geothermal, if offered by their energy provider.
Quite simply, consumers are not as disinterested as they appear. Could increasing availability and accessibility of battery storage, combined with opportunities to become power producers, awaken consumers around the world the way rooftop solar has in Australia?
As disruptive threats loom, utilities are not sitting idle. Many are quickly determining new business models to identify new revenue streams or lobbying regulators to raise fixed tariffs to prevent grid defection. Those outcomes are unclear. What is certain: In Australia and elsewhere, distributed energy is changing the energy landscape, and consumers are at the core of that change. Consumers have shifted from passengers to drivers—and energy providers need to determine if they are ready to deliver the map consumers need to guide their energy journey.
Simon Vardy is the managing director of Accenture's Utilities Strategy practice across Australia and New Zealand.