Technology about to set off electricity sector sparks
Electricity users may be concerned that this looks a bit too much like existing industry players trying to carve up the future while paying lip-service to the consumer.
OPINION: A tasty new scrap is starting to brew in the electricity sector. On one side are electricity retailers, who compete among themselves for customers and are, in many cases, also electricity generators.
On the other are monopolies that own the wires down which that electricity runs.
And around them circles an array of providers of the new technologies that will end electricity as a monolithically delivered service in which the end consumer gets very little say.
This future has been arriving for a while now, although more slowly than solar electricity enthusiasts who see nothing but obstruction in the traditional power companies’ approach to this massive challenge to their existing business model.
In fact, today’s lumbering power companies are urgently seeking relevance in a future where their customers and earnings are far from assured.
This not just about microgeneration – rooftop solar power and the like.
It’s equally about the accelerating reach of the Internet of Things into everyday life, along with the prospect of affordable batteries that can store enough energy to mean that a household wouldn’t run out of power and heat halfway through a storm like last week’s.
With all this in mind, the Electricity Authority has begun consulting on how best to ensure that ‘‘mass participation in electricity markets’’ occurs without the existing industry players screwing the scrum in their favour.
Submissions on its discussion paper have now been published, placing in public some battle lines that have been forming for months.
The issue, simply, is this: The electricity retailers fear regulated monopoly electricity network operators will steal a march with these new technologies by subsidising their development in ways that consumers won’t see and that hide uncommercial arrangements. Not only might that lead to higher prices, but also to less innovation and choice in a fast-moving area of technology.
‘‘Competition simply cannot thrive when there is a group of participants that have the potential take advantage of a monopoly position to create an artificial ‘leg-up’,’’ says Genesis Energy, the most vehement critic of network companies’ potential to shut out competitors.
Genesis and other large power companies argue such business developments should be ringfenced, as has occurred in Australia and the United Kingdom, to stop monopolies subsidising otherwise competitive activity.
The primary target for this criticism is Vector, the Aucklandbased network owner whose strategy for years has been to seek earnings growth in unregulated activities, including telecommunications and ‘‘thought leader’’ positioning on batteries, electric vehicles and smart-home technology.
Vector is dismissive of the retailers’ concerns and criticises the Electricity Authority.
‘‘In this period of transition, it is important to ensure regulation and policy do not obstruct the sector’s natural evolution and ability to innovate,’’ the Vector submission argues.
‘‘The more adaptive energy regulation is to innovation, the less disruptive the transformation will be for the industry.
‘‘Prescriptive policy is ‘fragile by design’ and a policy or regulatory strategy based only on one view of the future is unlikely to survive for long.’’
Other players sit in the middle. The Major Electricity Users Group, for example, urges the authority to ‘‘wait and see if any true policy design problems arise (as opposed to, for example, speculative problems promoted by a party with their own business model in mind)’’.
Electricity users may be concerned that this looks a bit too much like existing industry players trying to carve up the future while paying lip-service to the consumer.
If so, they have one very powerful weapon: their data.
As Genesis itself observes: ‘‘Consumers’ trust and confidence in the sector relies on market participants taking the utmost care to access and use consumer data for intended purposes only.’’ –BusinessDesk