I confess to being increasingly preoccupied by “picking the turn” in energy retailing. By that, I mean, pinpointing the moment when a market emerges for a demand-response energy solution, accompanied by a viable technology to enable it.
This preoccupation stems, in some small part, from an intellectual curiosity in how quickly products that use a proven technology can service a disrupted market – particularly one in which newly enabled prosumers are keen to show their mettle in the face of incumbent suppliers’ rising prices.
Right now, the perfect storm is brewing. Across all markets, disruption, the next blockchain success story and the demise of electricity as we know it, coincide with the relentless march of digital and the pursuit of individual energy solutions.
Why demand-response is in demand
It turns out that I am not alone in my curiosity. Others are watching developments even more closely. In 2016, the Global Integrated Demand-Side Management (IDSM) market saw total spending of US$40 million. Activity is expected to reach US$1.2 billion by 2025. In gigawatt (GW) terms, that’s a hike from 39 to 144 GW over the period.
These statistics tell us that more businesses than ever before are investing in demand-response technologies and the companies that own them. They do this to:
- Avoid the risk of obsolescence, by innovating in response to customer demands for energy efficiency.
- Bolster their physical presence, develop a strong foothold or dominant position in new markets and grow their customer base.
- Enhance their capabilities by anticipating changes ahead.
Where are the trail blazers in new energy?
Despite the acquisition trail, an interesting absence from this new energy market is the stand-alone disruptor.
This sector has few unicorns. It has no mass-market residential solution or platform that is absolutely critical to the way in which we buy power. Nothing really changes. Many of the conversations that were happening last year, and the year before, are happening this year. Finance is hard to find; contracts with established market players are less frequent; getting a market foothold is still difficult for new energy companies. There are no projects for financiers to invest in; only companies.
Even so, the “pull” factors remain. The markets for storage and peak management are more prescient than ever before. And the ever-increasing intermittency in electricity systems is a regular topic at industry events.
In fact, rank new technologies by likelihood to deliver most value and top of the list are:
- Peak reduction for networks,
- System stability for system operators
- Pool-price arbitrate and customer traction for retailers.