Who Is the eBay of Electricity 2.0?


Imagine a world where you can buy electricity from your choice of vendor (not the utility) at prices that can be negotiated with the vendor. Kind of like shopping at eBay or Amazon. Want to buy a week’s worth (1,000 kWh) of power from SebaSolar at 9 ¢/kWh? Just click here. How about switching to WindyWelly for the weekend (300 kWh) at 8.5 ¢/kWh? Click! Wait, NeoGeo just announced it has a ‘fire sale’ at 7 ¢/kWh for next Tuesday through Thursday. Click!

Well, imagine no more. This electricity world exists today. To see this new architecture of energy at work I went to Wellington, New Zealand.

Powershop is a unit of Meridian Energy, the largest electricity generator and retailer in New Zealand. “The vision of Powershop is to be like eBay for electricity,” says CEO Ari Sargent. “Any electricity generator in New Zealand, including Meridian’s competitors, can offer their own brands of electricity at different prices and different times.”

I think it’s also a bit like the iTunes Store since nothing really gets shipped. Just as iTunes moves electrons Powershop moves electricity.

Many countries require their electric utilities to buy the clean power generated by residential or commercial solar or wind installations. The utilities in turn resell this power back to other consumers. That is probably Electricity 1.5. Powershop goes beyond that. In the Powershop architecture, I could build a small 1-MW solar power plant and offer the “SebaSolar” brand on the Powershop Store. I could sell this electricity directly to consumers at prices that I set—not the utility.

This means that today New Zealand consumers probably have the most choices any electricity user has anywhere in the world.

Powershop has built a plug-and-play technology architecture. While Meridian Energy is the only one currently selling power (under different brands) on this website, anyone should be able to sell power to anyone else. Just as iTunes transformed the world of music, this could be a transformational technology in the power industry.

Powershop’s revenue model is more like an internet company than the energy industry: Take a percent of each transaction. They don’t charge “connection fees” like many utilities (cable and telephone companies included) or transaction fees. Transactions are as simple as can be.

New Zealand, a country the size of California with a population smaller than that of the San Francisco Bay Area, has created a relatively open, competitive power market that offers consumers choice and some of the lowest electricity rates in the developed world.

Welcome to Electricity 2.0!

Tony Seba is the author of Solar Trillions: 7 Market and Investment Opportunities in the Emerging Clean-Energy Economy.

photo: Atil Hardarson



Have any Question or Comment?

5 comments on “Who Is the eBay of Electricity 2.0?

tadatoshi

It’s coming – You can buy electricity from your choice of vendor e.g. the one with clean energy source. http://bit.ly/9fLbe1

This comment was originally posted on Twitter

Hi !

Electricity 2.o – very interesting !

My question:

who is in charge of the grid,

maintaining it, developing it, adapting it, reparing it ?

Regards

Martin

Martin:

The quick answer is that in New Zealand there are companies who are in the business of building, operating, and maintaining the grid. That’s all they do. These companies cannot generate nor retail electricity. The key to the existence of these companies lies in the way that the NZ electricity market is structured.

The NZ electricity market is roughly broken up into 4 parts. The ‘competitive’ markets are:

(1) Generation. Companies that generate power. For instance Meridian.

(2) Retail. Companies that sell power to end users. For instance Powershop.

The ‘monopoly’ portions of the market are:

(3) Transmission. This is the national High Voltage Transmission Grid. Like the Highway system for electricity. It’s run by one company: Transpower.

(4) Distribution. These are the local power lines that you can see out the window. They run from the substation (that draws power from the transmission grid) to end users (local home and businesses). Distribution companies are called ‘lines’ companies. Each local market has a lines company whose sole job it is to build, operate, and maintain the distribution lines.

To enhance competition there is a distinction between competitive portions and monopoly portions of the electricity market:

– Pretty much anyone can compete as a retailer or as a generator. Many companies are in fact in both the generation and retail businesses.

– You cannot be in a monopoly business (distribution, transmission grid) AND in a competitive business (generation or retail). For instance, if you are the distribution company in Auckland you cannot sell electricity there.

If you need more details, there is a good description of the NZ electricity market here:

http://en.wikipedia.org/wiki/New_Zealand_electricity_market

Regards,

Tony

Electricity will be a great addition for a sale.

Aniruddh

Hi Tony,

Great post.

Do you think something like this could be achieved in the Indian market without the support of big discoms. What challenges do you see for similar companies in other countries who may be starting as a third party without an energy retailer behind them?

Thanks.

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