Australia’s energy sector has operated under a basic premise for most of the past 100 years. Electricity is generated at large plants, distributed by large power lines and then delivered to consumers through the distribution network. Customers are billed for their usage based on established rates.
Until about 20 years ago, all those components were owned and operated by state-based electricity commissions. But the establishment of the National Electricity Market (NEM) changed things significantly. Each major component on the electricity system was split into separate companies, and several new entities were created for specific roles.
Aside from some very large investments made on generation, transmission and distribution assets, the other key roles around retailing and meter data analytics have languished for much of the time since the establishment of the NEM.
Much of this stems from the need to make very large investments to compete with the market incumbents. Competing with the likes of AGL and Energy Australia that have millions of customers on their books is a daunting task.
But newcomers, such as Mojo Power, have an advantage. Born in the nimbler internet-enabled era, they bring user data to their customers using platforms that older players are struggling to adapt to.
Mojo Power offers a pricing system that is different from that of traditional retailers. It contracts for energy directly with generators and offers customers a subscription-based usage contract. They give customers direct insights into their energy usage in near real-time and offer incentives to reduce their power use during peak pricing periods.
Several components, developed by Mojo Power, make this possible.
While the wholesale price of energy often gets a lot of attention in the media, much of the energy traded in the electricity system is handled through off-market contracts. By contracting for its customers’ energy, Mojo Power can avoid the price volatility of the wholesale electricity market, which sets a price every five minutes based on supply and demand.
In New South Wales and Queensland, where Mojo Power currently operates, smart meters are installed at customers’ premises.
“The meters we install, and the systems we have in place, are real-time,” says Mojo Power’s CEO Phil Ridley, adding that the meters collect consumption data – which can also be queried in real-time – in 15-minute intervals and sends the data to systems housed on Amazon Web Services (AWS).
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That data is made available to consumers almost instantly through mobile apps. The advantage of this approach is that customers can query their power usage and see the effects of a specific appliance or activity almost instantly. “You can turn on your heater or pool pump and see the impact in real-time,” says Ridley.
The good news is Mojo Power can do all of that without taking a mark-up from energy consumed off the grid. “We make our revenue with a subscription model. Our customers pay a monthly or yearly subscription that gives them access to energy we buy, at cost”, says Ridley.
In Victoria, where every household already has a smart meter, a different approach will be needed as those meters do not support real-time querying – something which Mojo Power is looking at.
Microservices deliver competitive edge
Mojo Power leans heavily on cloud-based technologies – either managed directly by the company on AWS or through third-parties that also leverage AWS.
“Our glue, which keeps out business together, is based on microservices,” Ridley says. “We’ve got a Lambda-based microservices architecture. All our data processing is through Amazon. A lot of the automation work we do, which is very complex in the energy market, is done with bots running on Amazon infrastructure as well.”
Besides serving customers directly, the level of insight and control Mojo Power’s customers have on their power consumption can give the company an advantage.
If they can incentivise customers to reduce their consumption during peak wholesale pricing periods, Mojo Power can effectively release contracted capacity back into the market, creating a new revenue stream for itself.
As an example, Mojo Power could have contracts in place to supply 100 energy units at $50 each to customers for a series of five-minute market intervals. That has a total value of $5,000 per interval.
If they can offer incentives to customers to reduce that requirement to 75 units, they can offer the excess 25 units back to the market at rates that exceed what they originally contracted.
So, if the wholesale price has jumped to $1,000 – a reasonably common event – then those released 25 units have a value of $25,000. That is income that cannot be generated using traditional retail systems and processes.