Open Utility Creates Disruptive Platform for Global Energy Market

February 27, 2014
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Whether your brand of politics advances or retards your belief in global warming and pollution, the one thing the numbers are clear about, is that old world energy producers are beginning to take a hit where it matters most – their bottom line. This is rooted in the concerted move by the world’s population towards a greener solution, and the growth of a sustainable energy generation.

In August 2013, in its article, German Utilities Hammered in Market Favoring Renewables, Bloomberg reported the move to greener energy and attributes it to a more conscious consumer. That article was published in the wake of the precipitous energy price-drop in Germany through much of 2013. The Economist, in a similar article, called the threat to old world utilities and power producers as ‘existential’, portending doom to the capital-intensive hydrocarbon based generators. They were right.

The antiquated power producing norms are going down in flames, and out of the ashes of cogen plants, emerges the Phoenix of the new paradigm – private green energy producers. Instead of a small number of concentrated power producers who run a virtual monopoly, here comes fragmented, individual power producers and micro producers.

 

Why it Has Taken So Long

Until recently, there was something missing from the big picture that ties everything, the micro producer and the green customer, together.

The missing link in this chain was the framework to put the producer in touch with the consumer, in real time. This is where startup Open Utility steps in and offers their solution. With its business model, which promotes choice and free market ingenuity, the large, and growing, number of independent power producers, are transparently revealed to anyone looking to purchase power, whether it’s a factory or a household. The concept is another example of how the world has evolved from B2B, to B2C and now to p2p, peer to peer.

Once again, another intuitive startup is using cloud technology to make big changes happen. Open Utility encourages visitors of its website to ask themselves a simple question:

“Imagine if you could buy some of your energy from local renewable sources. Where would you buy from? A local school, your community group or perhaps even your neighbours?
Our mission is to make this happen. We are creating a peer-to-peer energy marketplace for buying and selling electricity making it easy and rewarding for everyone.

 

The Solution

Open Utility was founded by James Johnston and Andy Kilner. Among their advisors is the founding member of PayPal Europe, and a former director of a utility company in the UK. James is expected to complete his PhD in Mechanical Engineering this year. He already has an MSc in Renewable Energy Systems. Andy Kilner, the second of the two co-founders, is fluent with big data and is a programming expert. He understands the programming framework and the intricacies of open source. Andy provides the software half of the brains to James’ hardware half. The Founders’ skill sets perfectly compliment one another.

Open Utility is positioning itself as a peer to peer energy marketplace. While its platform certainly helps green energy companies, its primary goal is to help reduce energy costs for the consumer by creating a more competitive and transparent marketplace, with more options. The company is currently located in London’s ‘Tech City‘. They moved there from the premises of their early stage seed investor, Bethnal Green Ventures. Open Utility also recently won entry to the Climate-KIC Accelerator Program, which is Europe’s main initiative for climate related innovation.  Winning entry to the Accelerator is no small feat, and goes to show the caliber of the idea.

 

Strengths and Weaknesses

As smaller producers make huge, capital intensive power producing assets obsolete, prices will continue to reflect the new reality – a reality that will force the larger energy producers to change their ways or go the way of the dodo bird.

From private, small-scale producers to micro-producers, there will be a sufficient number of micro entrants to fill the void of the slowly dying giants. With all these small producers soon to be pumping into the grid, a viable solution is necessary to monetize the unused energy generation, and make it available for purchase. Open Utility promises to do that with their software that has already begun testing in Cornwall, England. The company’s timing to enter this market is one of its strong suits.

Open Utility’s team has significant experience in handling large scale projects and they have the necessary advisory capacity to bring in real-world aspects of commercialization.

As with many startups, the challenge Open Utility faces, at the moment, is finding the funding to take it to the next level. The timing is right, but if they do not secure sufficient funds, they risk the chance of slipping out of the race to dictate the way the market evolves. If they do get adequately funded (which I suspect they will given their advisory team), the future for this brilliant start-up is bright.

 

Key Success Issues

Open Utility is entering a market that is the proverbial Wild West. But with Europe, led by Germany, and Asia, led by Tokyo, leaning toward green energy produced on smaller scales, the prospects for micro energy production is immense.  To succeed in this environment, Open Utility needs to stake their claim as the standard bearer of the industry. The first mover advantage is theirs for the taking if they strike now, and will set them up as the benchmark for future development in this niche.

I see similarities with another disruptive technology, a favorite of mine – crypto currencies. Open Utility, like cryptos, disperses control to the hands of the masses and empowers them, rather than the status quo that concentrates control in the hands of the few. It is an enabler of disruptive technologies and the timing for such a force couldn’t be better.

One other key to success for this company lies in the features of the user interface. They are not just catering to large conglomerates with huge IT departments, they are also catering to simple households. The interface needs to be intuitive and simple for the layman to use. So far it seems they have that. Perhaps Open Utility could give a lesson to the creators of healthcare.gov.

 

How it Will Play Out

Open Utility needs to get crowd funded or angel funded in the near term to catch the wave of micro energy producers. If they manage to capture the lion’s share of this market, not only will they be able to provide the missing link in the chain, they will also be a prime candidate for a buyout, at a hefty price tag (a potential acquirer would either be a massive tech or energy company). Considering that Google has intentions of entering the energy market, Open Utility could be a buyout candidate in the medium-term (3 to 5 years).

This is one startup that has the potential to revolutionize the energy industry as we know it…

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AJ is a naturalist and economic realist. His articles are based on his study of world events and common sense, not conventional wisdom. He believes technology allows humanity to get past the deficiencies inherent in civilization's inadequate political methods and deficient economic tools. His observations are sometimes radical, sometimes provocative and sometimes misunderstood. But they are effective in evoking a discourse. Ultimately, that is his intention and desire - to stir the pot in search of solutions to today's political and economical challenges.

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