Platforms are one of the hot topics in the new energy sector. There are platforms which connect buyers and sellers such as for installing heating appliances or auto-switching, which interrupts the traditional energy retail-customer relationship. And there are those which connect, link and even manage large numbers of energy assets together such as hot water tanks, electric vehicles and batteries.
But why are platforms such a hot topic today?
The energy system is decentralising, which means there are a lot more assets in the market: millions and millions of small devices rather than tens or hundreds of large power stations. These assets are already in homes and businesses – or will be soon. From smart thermostats to electric vehicles to monitored hot water tanks, more and more of these assets are digitalised with connectivity almost the default option.
Why? The value add from these assets and the potential for supporting system decarbonisation and the energy transition is a different article. But these assets must go through a centralised place in order to connect and realise the much-anticipated benefits. And that is where platforms come in, to maximise value and to make the electricity (or energy) system benefit as a whole, through a single managed or optimising “hub”.
While there is clearly a need for platforms, particularly in the residential sector with small loads and multiple assets, what is the business case for companies providing these? Companies already providing platforms ideally want to operate the complete value chain but being flexible regarding working with partners is also important.
Conor Maher-McWilliams of Kaluza says, “we can offer most value whenever we can package up the whole value chain and deliver that [to our partners]. And based on our kinds of technical capabilities we see ourselves well-positioned to do everything from connecting to understanding how best to extract value from flexibility available.
“Having said that, in certain cases we’ll encounter a partnership with someone who’s already got a connection to their devices and has built that infrastructure. In that case, they may hold that part of the value chain and then we plug in the energy intelligence to their system.”
Finding potential partners is not always easy, however. Sandra Trittin, Co-Founder and Head of Business Development at tiko, suggests, “on one side, many utilities are still in the discovery phase to really see what the customer need is. The second step is also how much risk they want to take to go into that service offering, going away from just offering a tariff to offering a service.
“Additional value is for many of them quite new. So it just takes a bit of time [when working with utilities, for them to] go through that transition and be sure if [they] bring out a new product on the market it resonates with the customer base.”
Aside from finding successful partnerships, there are other challenges involved with creating a successful platform business. Maher-McWilliams suggests, “a lot of the challenges we face are related to policy and regulation not being able to keep up with the pace of innovation and technological advancement.”
Given these challenges, how quickly will platforms move forward?
Delta-ee Director Jon Slowe thinks, “there’s a lot of discovery at the moment, a lot of taking existing companies on a journey, and a lot more in the next years to shake down in terms of exactly who does what in what part of the value chain. But it’s a certainly a fascinating sector, one that will grow quickly in the next years and one that is bound to be a significant part of the electricity system going forward.”
This content is taken from episode 11 of Talking New Energy, a podcast from Delta-ee. Listen and subscribe at www.delta-ee.com/talkingnewenergy.