Energy as a service
The established foundations of our energy world have been shaken. The new hungry players are eager to take their share of the market.
When a dinosaur falls, the small beasts feast.
The energy business is in an interesting phase. State owned energy utility giants have been privatized worldwide. These energy monopolies have been sliced to separate companies, where another one produces energy to the markets, one buys and sells that energy, and another one distributes it to consumers.
What makes the earth quake? Why are the foundations trembling? It’s the affordable and distributed renewable energy. Some households are rioting, since now they have the means to do so. When the energy used to be in hands of a few, the future looks different.
New service providers are sneaking in to the billion dollar businesses, ready to sell, lend and lease. For example the biggest solar retailer in the US, SolarCity, offers three different ways to own your own system. Available are power purchase agreement, lease and the more typical option in Finland – to purchase your own system.
All of the above are promised to save us money. Two of the three are services. For commercial customers, SolarCity seems to offer only service business.
But when is this happening? Are we already in a worldwide new era?
Einstein made pretty clear that time is relative. So is the phase of change. Frankly speaking we are not there yet, but the goal has been set. As you know we are aiming for a strong change in ouremissions by 2050.
We have 34 years to go near zero carbon in Europe. It is slow if you are an eager start up pioneer with an idea. It is fast if you think of all the investments that need to be made.
It’s something like replacing all cars in Finland in 10 years. Pretty much all new investments must be made into carbon free energy production. What is important, from a start up point of view, is that future investments go green. You have a nice 34 years of happy customers ahead of you.
This is not easy. It’s even more difficult when the predominant behemoths of energy industry have to close their existing large-scale power plants. Why is this relevant? Before the energy market situation balances out, the electricity prices will keep plummeting.
This is good for consumers but bad for the energy companies. They have to close down some of their old power plant capacity. In my opinion it might make more sense to close down plants with high carbon emission first, instead of nuclear power plants. But money talks.
The market is definitely confused. This is good. Now is the time to take the new course. Fast and risky productizing suits extremely well for startups.
Startups need results now.
They do not wait for decades; they hit the opportunities that are available today – or latest tomorrow. For large companies it might be faster to test their ideas and minimize their risk with more agile concept than their own R&D.
Ok, got that. But which direction should our startup take? Where are the opportunities? Renewable energy, Internet of Things and all these opportunities can be difficult to get a hold of.
In the US the highly appreciated Bloomberg names 25 startups in the energy scene. The ideas range from better diesel engine for cars to waste-to-diesel concept, solar panel innovation, Internet of Things appliances, solar leasing and so on. I’d conclude that the companies see possibilities in three groups of ideas, namely energy efficiency, renewable energy, and in smart electric appliances.
The first two groups are quite straightforward requiring technical approaches. Make a wind turbine, new solar panel material or wave energy harvester. The last batch integrates electrical engineering, energy market knowhow and communication technology. It wouldn’t hurt to understand consumer behavior either.
I’m sure Finland and the Nordic countries are full of that expertise. Mobile technology knowledge base alone can kick off tremendous amount of startups to the emerging service market – not only in the US but also in Europe.
And I’m not alone. In Salo, Southern Finland, where Microsoft left an army of IT engineers to pursue for a new career, the scene is booming with new ideas and entrepreneurial ideas. Dozens of startups are already being founded. Even then the amount of experience available is huge. I hope many of them find their way to energy sector.
The opportunities are vast. Getting the right mix of backgrounds together leads to innovation. It is extremely important to gather the right competent people. Still it’s not a guarantee for success.
What makes a startup successful? What makes the difference? To me it seems it’s the enthusiasm and drive that make most of the difference. Strong community driven marketing seems to be the second key to success in startup scene.
You don’t have to take my word for it. The founder of Slush tech conference Miki Kuusi, said in a recent interview, that there’s actually not much difference between the people in Silicon Valley and elsewhere. What makes the difference is to believe that you can change the world.
Kuusi was featured recently in Forbes as one of the 30 top young talents in consumer technology.
It takes the speed and excitement of fast startups with courage to fail, but with resilience not to give up. Take the right people with varying backgrounds, give them the opportunity to make rapid moves and test the market with quickly built products and services.
If you are not going to do it, someone else will. The market is hungry for innovation.
How about you come to see yourself? The Energy Spin brings together fresh ideas and hard boiled business angels to break into the opening new market. Come and see yourself.