Who will plug in the electric consumer?

The potential of home battery systems and other forms of distributed energy are widely known and discussed.

A home battery can provide a myriad of possible services across all parts of the energy system. The problem is that these markets are mostly imagined today, or in the process of being created. Policy makers, regulators, networks and retailers are working hard to create these markets, but there is still one thing missing... who brings these multiple services to the consumer?

There are enormous efforts underway to create these markets for consumers. Much like Kevin Costner's character in Field of Dreams, we are building/creating these new markets and hoping that the players will turn up.

Don't get me wrong, I am a firm believer in how markets and competition can provide real benefits to customers. My question is the pathway(s) that will see these new players emerge.

While consumers are installing solar PV, batteries and EVs at ever increasing rates, we are lagging on providing consumers with the means to access these new markets. This is due in a large part to the complexity of the task; creating open and competitive markets within the the existing electricity systems is a mammoth task.

There is also the temporal challenge that distributed energy (especially batteries) are still very expensive. I suspect that most people reading this believe that declining costs will make distributed energy viable in the near to mid-term future.

Another common perception in the energy sector is that customers will not want to get involved in the day-to-day complexity of tariffs, pricing, optimisation, etc. I also share this perspective, and it leads to the expectation that new customer-facing products will need to present the consumer with a simple and understandable front end. This means contracts that are understandable and trusted, and interfaces that are meaningful and relevant.

My meager imagination sees two possible models for delivery of these customer offers;

1. Flat fee service - akin to the telecoms and internet models of today.
2. Device-based services - where the energy supply offer is structured around the purchase of a new home device such as an EV or battery/solar.

Question 1: What other product or service models do you see emerging?

The second unknown is who will deliver these new products and services. While the existing electricity retailers appear to be in the right place to step up to this role, history has highlighted how difficult it is for incumbents to step outside of their hard-earned portfolios.

New market entrants will need a lot of capital to play in these markets. Not only are there high costs for new market entrants and customer acquisition, there are also challenges in integrating very diverse devices within the home.

Point-of-sale would appear to be a possible pathway to customer acquisition. When buying a new EV, the customer could be offered enticements to sign up to a new retail model with a bundled EV service.

Will we see devices attached to certain retail offers? By this I mean that (for example) a new battery will only work with a certain energy provider. This sort of technological lock-in is not unknown. The Apple mobile phone model highlights that customers can highly value the simplicity and structures of a "locked-down" operating environment.

On the other hand, policy makers may view consumer "lock-in" as an anathema and something to be avoided. This is a hard space for policy makers, while customer lock-in has some clearly negative customer outcomes, enforcing open standards could potentially kill a unicorn. We don't know what sort of innovative products or services are being planned for consumers, and that will only occur in a "walled garden" environment.

Question 2: What are your thoughts on whether we should require open device standards to enhance competition, at the risk of stifling some areas of innovation?