Our relationship with electricity is intriguing. We don’t so much consume electricity, but rather the devices it powers. Like data and mobile phone services, these services sit in the background of our busy lives. There isn’t a premium grade of electricity, nor is there a budget version. Everyone gets the same stuff: 240volts, 50 hertz, and as much or as little as we need, delivered into our home and businesses, every minute of every day.
So what do customers want? Reasonably, they assume that the service will be delivered reliably. By that we mean at or above the reliability standards provided for the past decade. Blackouts are a rare and unusual event, normally cased by a local fault that is fixed quickly. They also want to know that what they are paying for electricity is a fair and competitive rate. When prices increase rapidly, as they did a few years ago and again in the last year, customers struggle to see why this should be. The lights aren’t any brighter. Nothing else has changed. So why am I being charged more?
Customers also want to know the service is safe and sustainable. They know electricity can be dangerous and so they assume it is being delivered safely into their lives. They want anxieties about climate change dealt with. They want to know that the environmental impacts of greenhouse gas and other emissions from power stations are being reduced and eliminated.
Electricity is changing, and rapidly.
Two decades ago Australian households started to install solar hot water systems. This was then followed over the past decade by rooftop solar PV panels, which generate clean electricity, rather than just heat water. These technologies have been appealing for customers because they save money, use clean renewable solar energy, and they work without any intervention or management. These same customers are now starting to look at the cost and feasibility of other technologies like batteries and electric cars. Customers are going to be increasingly active in the way the grid works through the 21st century.
The other big change is the type of generation we will use. Renewable generation like wind and solar is now the cheapest source of new generation power. We will be using more and more of these technologies to power our lives. Because the wind and sun don’t blow and shine all the time, we will need to back these up with other technologies: hydro, gas and storage. The value of electricity will start to vary significantly at different times: on windy, sunny afternoons it will be very cheap, on cold still nights it is likely to be more expensive.
Customers will have growing incentives to make the most of the times when electricity is abundant and to use less when it's scarce. Of course, most customers don’t want to rush around turning devices off and on all day. Instead, with the support of their retailer, they will access smart technologies that do the work for them. Like solar panels, increasing the flexibility of customer demand will be automated and effortless. A breathing, active grid where customers both contribute supply and adjust their demand automatically and without disrupting their businesses or home life.
All customers are different.
Some are at home during the day, others are at work. Some can host solar panels, others cannot. Some businesses can shift their operations around, others are bound by the markets they work in. That’s why competitive retail electricity markets will be increasingly important in the 21st century.
This article was written by Matthew Warren. The opinions expressed here are his own and don't necessarily represent AGL Energy's positions, strategies or opinions.