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Community energy projects pose challenge for mainstream suppliers

Renewable energy generated by community projects are gaining more local support.

Renewable energy generated by community projects are gaining more local support. Photo: Glenn Hunt

A gradual loss of trust in mainstream electricity suppliers and a growing sense of local engagement have driven huge growth in community-based renewable-energy projects in Britain, with a similar trend potentially taking hold in Australia.

Volker Beckers, the former head of British energy supply giant Npower who now chairs London-based Albion Community Power, said traditional large energy suppliers risk losing customers to the smaller, local outfits.

Community ventures typically take advantage of community support to push renewable energy projects through planning processes, while building a customer base that in some cases in Britain have reached into the hundreds of thousands, eroding the market share of larger utilities.

A surge in community energy projects in Britain, where they now number as many as 5000, was creating “healthy competition” for the big six utilities, which were having to quickly respond with increased customer focus, he said.


“Community energy means business models have to become more customer centric,” Mr Beckers told Fairfax Media while in Melbourne to attend a conference.

“In my view the big utilities which can respond and adapt as quickly as the small-scale renewable-energy companies can do will survive. Others will have to completely redefine their business model.”

Mr Becker pointed to research carried out in Europe that found the “net promoter score”, a recognised method of gauging the loyalty and support of a firm’s customers, was typically 20-35 per cent higher for community energy companies than traditional utilities.

Support from a local community can be 20-30 per cent higher for a wind farm that is being built by a local company, for example, rather than a more anonymous mainstream utility, because people believe that the benefit of having local generation will flow back to that community.

Mr Beckers said the ventures were “an example of the shared economy in the energy area”, where people were more supportive of a product where it gets generated. That leads to lower administration and operating costs, with savings flowing back to customers in the community.

 “It’s a win-win for both sides, customers and companies alike,” he said.

Australia has an increasing number of community energy projects, put at 70 by non-profit organisation Embark Australia, which works to accelerate the uptake of community renewable energy. About 16 are already generating power.

One Northern Rivers community venture, Enova Energy, is seeking to raise $3 million-$4 million for a float. It is aiming to stimulate renewable-energy projects nationwide and build a customer base that would win accounts from the dominant retailer in the region, Origin Energy.

Mr Beckers said the community initiatives were tapping into the general trend in the energy supply industry away from centralised conventional power plants to more decentralised, low-carbon plants, whether wind farms, solar panels, mini-hydro or geothermal. The ventures tend to better understand local requirements, and benefit from communities regarding them as “partners” rather than part of an anonymous energy giant.

“It is emotions, it has nothing to do with reality” he said. “I was chief executive of a large utility in Britain and enhancing and improving consumer trust was one of my key requirements, but it feels much easier when you are at the helm of a company that is a community energy business because the proposition is we are doing this for the community, with the community, and working together on securing and sustaining supply.”

Mr Beckers said moves by consumer giants such as Apple, Google and Samsung into the energy market underscored the trend in the sector to place more importance on customers, on use of digital technology and on enabling people to manage their bills and energy supply in their home.

“As many successful retail businesses have proven, you have to start with the customer’s view of the world and then engineer this in your whole organisation,” he said. “I’m afraid to say that the central, large-scale business has had its time and will have to transform into a more devolved business.”




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