Written as editor of the New Statesman’s NS Tech and first published here.
Open Utility has just come out of a six-month trial of its data-driven, peer-to-peer marketplace for renewable energy.
Piclo is an energy trading platform with an accessible design that could one day make selecting your energy supplier(s) and saving money as easy as booking an Uber.
But rather than guarding the findings of its pilot, the tech startup, working alongside renewable supplier Good Energy, has released a report outlining its efforts to transform a historically closed market.
“There are legacy systems that no one wants to touch which are mission-critical to our energy system, but incredibly fragile,” Open Utility co-founder and head of design Alice Tyler explains. “We’ve worked on doing innovation without scaring people.”
Piclo provides a software layer that sits on top of legacy energy reporting systems and uses half-hourly generation and consumption data to algorithmically match supply with demand.
Both suppliers and consumers can make preferences for who they want to be paired with and the pilot also tested the potential to set different prices so that, for example, people living in fuel poverty could one day get cheaper energy.
Working with the Eden Project, which has a mandate to tackle climate change, as well as the likes of Liverpool’s Benson Signs, Open Utility wanted to show what decentralised energy, powered by data, could look like.
“You really don’t have to be an ‘Eden Project type’ to be concerned about where your energy comes from,” Tyler says.
Perhaps unsurprisingly, being able to use Piclo to see their energy usage and make choices about buying it meant users were engaged with their boring old supply like never before.
“What we didn’t realise at the beginning was that the distance you are away from the energy source was more important than the renewable technology type,” explains co-founder and CEO James Johnston.
Break the rules = get cut off
Unfortunately, here lies perhaps the greatest challenge for energy disruptors that affects few industries in the same way.
“The key to this model working is in the regulations. If people are buying from their neighbour then they shouldn’t need to pay distribution charges – but existing regulations mandate that,” Johnston says.
In other words, today, it costs you money whether your energy comes from hundreds of miles away or if it’s generated locally, even though it doesn’t cost the same to transfer it.
“We’re trying to change the regulations to support this new way of doing things and we’ve already developed a proposal for the energy regulator Ofgem. In that, we’re trying to get another trial with the grid operators to test out fairer grid charges for local trading.”
But, unlike what happens when something like Uber comes on the scene, Johnston says: “They can just turn off the supply if you break the rules.”
With big data, however, also comes big opportunity.
“Distribution network operators are really struggling with the amount of renewables being connected to the grid,” Johnston says. “Knowing where there is greatest demand could incentivise new generators to build where they would get biggest income.”
UK drops in EY renewables index
If regulators can be convinced, Piclo could become an exemplar system for the world. Although there are other data-driven models taking off across the world, including The Netherlands’ Vandebron and Germany’s Sonnen, Piclo would set the precedent for new, many-to-many systems.
Here, though, Johnston also questions whether the liberalised energy market in the UK, compared to somewhere like the post-Enron, tightly-regulated Californian market, really makes for an easier system to tackle.
Smart metering is expected to reach 30m households in the UK by the end of 2020 and Ofgem recently recognised that using half-hourly consumption data is in the interest of consumers.
But just today, Ernst & Young’s annual league table that ranks countries’ attractiveness for renewables startups and investment revealed the UK has dropped to 13th place, a huge change considering it regularly topped the table in the mid-2000s.
Billions of pounds of investment is likely to be lost, as well as opportunities presented for businesses and individuals alike by startups like Open Utility, if the government continues with its recent hostility to green energy.