Power companies vulnerable to Uber-style disruption, researcher warns
Summary: Australia’s power companies are vulnerable to an Uber-like digital disrupter emerging to undercut their business model, a leading academic in the energy sector is warning.....
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The move could be a double-edged sword for households, with the benefits of potentially lower power bills offset by the risk of more intermittent supply.
QUT researcher Associate Professor Robert Perrons recently addressed a United Nations event in Geneva, Switzerland, to warn of a coming change in the energy sector.
Professor Perrons said an agile digital disrupter could easily insert itself into the existing power supply chain before big power companies could react.
“The archetypes are obvious- we see the Ubers, the Airbnbs, the Amazon.coms,” he said.
“The act of making the interfaces between different stakeholders in the value network digital makes it easier for a de-coupling, or an unbundling of processes and networks which previously were tightly bound up.”
Professor Robert Perrons speaks at the United Nations on the risk of digital disruption to the power industry.CREDIT:QUT
As a theoretical example, Professor Perrons suggested because so much of the data around sourcing oil and gas was already online, a disrupter could set itself up as a one-stop-shop for power companies to approach when choosing where to set up operations next.
Such a company could become powerful and influential in the energy sector without having any energy-producing assets, in the same way Uber became a major player in the transport industry despite not owning any vehicles.
“In this new digital world that we're living in, you can have someone run in and steal your lunch,” Professor Perrons said
“They're still leaving you with the physical assets, but they figured out a way to make money around you, and in a way that leaves you sitting there holding assets that are worth much, much less.”
Professor Perrons, who has held multiple roles in the energy industry including serving in Shell International’s exploration and production division, said the threat of a third-party digital company moving into the energy sector was exacerbated by increasing fragmentation already happening in the market.
More and more people were shopping around for the best energy provider, or going a step further by using solar panels to reduce costs and feed back into the grid.
Once the cost of home battery storage reduced to the point of becoming an affordable household appliance, many homes would be able to disconnect entirely from the mainstream power grid.
“I was doing some work with Powerlink recently, the electricity wholesaler for the state of Queensland, and we were working on big data and I know this is something on their minds. They’re thinking hard about it,” Professor Perrons said.
“We have seen in the past few years the rise of the ‘prosumer’, where people purchase power but also generate it with the panels on their house.
“You just have to drive down any street in Queensland to see this is fairly ubiquitous now, and this is definitely something that Powerlink has had to think very hard about.”
Addressing that concern and becoming more agile to fend off digital disrupters would be a key challenge for energy companies going forward, Professor Perrons said.
“We still have some very fundamental issues we have to work out; how we reconcile the fact that we want this democracy of energy, but we still want the grid to step up as a last resort to make sure the lights stay on,” he said.
“We have to reconcile that, and we haven’t had that awkward chat yet.”