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Similar to Renewable energy uptake through alternative business models
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Renewable energy uptake through alternative business models
- 1. An alternative business model to facilitate renewable energy uptake Solar Power 2013, Brisbane Scott Davis, Horizon Power
- 2. Hi, I’m Scott Davis • Manager Sales, Marketing and Product Development at Horizon Power • Background in Sales and Marketing, Business Operations, Sustainability Consulting, and Supply Chain Planning • Bachelor’s degree in Engineering and a Masters in Renewable Energy
- 3. About Horizon Power • WA's regional and remote electricity provider • State Government-owned and commercially focused • Serve 33,000 residential connections and 9,000 businesses, including major industry • Responsible for the generation, procurement, distribution and retailing of electricity • 35 Towns – most have PPA contracts with IPPs • Contracts allow limited RE purchases from other parties • Prosumer RE buyback offer has town by town pricing
- 4. We are the ‘canary in the coal mine’ • Horizon Power offers a unique window into the future with regard to: – Integration of renewables – Alternative business models – Role of renewables in demand side challenges • Seeking new, cost effective solutions to these challenges
- 5. Topics
- 6. 1. Economically efficient pricing (supply and buyback) 2. Maximise Horizon Power’s renewable energy hosting capacity 3. Facilitate a greater range of choices for customer to participate 4. Tap into broader problem solving groups to create solutions 5. Seek partnerships with the market to overcome barriers Our Vision Architect and developer of sustainable energy solutions 1. Value for customers and shareholder 2. Lower Horizon Power’s costs 3. Reduce CO2 emissions What is our motivation? What are we doing?
- 7. Our motive for change TOPICS: 1.Will current business model be suitable for 2035? 2.Facing change and emerging trends 3.Technical and commercial constraints of PV on small electricity systems 4.Business strategy includes the creation of lasting value in our communities
- 8. Horizon Power sells … bundled c/kWh (capacity+ energy) Horizon Power buys … Capacity Energy (kWh or fuel) Renewable buyback GENERATE Horizon Power buys Horizon Power buys Lost sales due to RE Horizon Power sells DISTRIBUTE MEET CUSTOMER DEMAND Will this business model be suitable for 2035? Horizon Power distributes FUEL MODEL SALES VOLUME END USE UNINFLUENCED ENERGY LOW COST HIGH COST BUY BACK LOST SALES NUMBER OF CUSTOMERS
- 9. ‘GENERATE’ ‘DISTRIBUTE’ MEET CUSTOMER DEMAND Facing change and emerging trends District cooling Supply side generation Energy services retailer Electricity retailer Smart distributor and integrator Smart homes Community co-ops micro grid connected Electric vehicles Energy efficiency services: e.g. fit LED lights Coolth ? ?
- 10. Facing change and emerging trends Market / Customer •Increasing costs of supply •Non traditional competitors •More sophisticated customers Technology •Its getting smarter and cheaper Government •Climate change response •Market intervention
- 11. Our motive for change Forces Barriers
- 12. Barriers to PV on small electricity systems Technical constraints Commercial constraints Demographic constraints
- 13. What happens when we connect too many solar panels? Engine 3 not running
- 14. Significant impact from cloud cover Sudden demand for engine to ramp up and supply all electricity Could cause unplanned power interruptions
- 15. What happens with generation management? Engine 3 not running
- 16. We can connect more solar before encountering significant impact Battery gives Engine 3 time to ramp up
- 17. PV in small systems – commercial constraints • 35 towns, most with IPPs operating under PPA • Long term contracts • Opportunity to get market share: – Limited amount of RE purchases from other parties – Demand expansion – Contract renewal • So how do we maximise the amount of PV in our systems?
- 18. PV in small systems – commercial constraints PPA Contract Allows for limited amount of RE purchases from other parties Most of electricity supply
- 19. PV in small systems – commercial constraints PPA Contract Allows for limited amount of RE purchases from other parties Most of electricity supply
- 20. PV in small systems – commercial constraints If a customer exports 50% - could install twice as many panels “Innovative prosumer solutions” PPA Contract Allows for limited amount of RE purchases from other parties Most of electricity supply 50% solar electricity used in the house Buyback offer Horizon Power buys solar electricity not used
- 21. PV in small systems – commercial constraint PPA Contract To more broadly compete, solar needs to present more firm capacity To more broadly compete, solar needs to present more firm capacity Allows for limited amount of RE purchases from other parties Most of electricity supply
- 22. PV in small systems – demographic constraints • Customers range from miners in Port Hedland to remote Aboriginal communities • Some customers can’t afford upfront costs of solar panels • Not all customers live in the location with the best prices • Looking to the market for commercial innovation – PV leasing, others ways to participate
- 23. In summary: our motive for change “The best way to predict your future is to shape it.” “The best way to predict your future is to shape it.” Winston Churchill Looking at alternative ways to do business Architect and develop sustainable energy solutions Forces Barriers
- 24. Topics
- 25. Alternative business model Horizon Power ‘market enabler’ Alternative industry solutions Greater overlap of goals Leverage each others’ strengths Rooftop Solar farm Hybrid
- 26. Alternative business model Horizon Power ‘market enabler’ Alternative industry solutions Greater overlap of goals Leverage each others’ strengths Technology Services Tap into broader problem solving groups to create solutions
- 27. Topics
- 28. Horizon Power’s role as enabler – example 1 Buyback price by town •Buyback price aligned with cost drivers •Pricing is town by town •Alternative financing options Economic efficiency Horizon Power’s pricing Industry focussed on best ROI
- 29. Horizon Power’s role as enabler – example 1 Community Power •Link customer’s investment dollars to most efficient investment locations and technologies for low carbon energy •Design a funding mechanism that links the customer’s desire to invest with the most productive locations for RE Horizon Power’s pricing Broader finance options for RE Economic efficiency
- 30. Horizon Power’s role as enabler – example 2 Provide requirements to the market for broader problem solving to create commercial and technical solutions for customers Generation management to increase hosting capacity Horizon Power’s Technical Requirements Industry develops what is feasible PRODUCT – MARKET FIT $50k cash first prize by Department of Commerce
- 31. Horizon Power’s role as enabler – example 3 Seek partnerships with the market to overcome barriers Facilitate customers’ access to product/s Seeking installers for RE sales campaign via EOI •Focus in 18 ‘high solar value’ towns in the Kimberley and Gascoyne/Mid-west •The trusted brand of Horizon Power endorsing RE Industry access to market Customer outcomes Horizon Power endorsement
- 32. Town X: large town supplied by gas Energy 9c/kWh Capacity $750/kW Solar Noon6am 6pm kW Maximum output in ideal conditions 150kW x $750/kW = $112.5k pa 150kW PEAK 4pm
- 33. Town X: large town supplied by gas Energy 9c/kWh Capacity $750/kW Solar Noon6am 4pmOff- PEAK Off- PEAKPEAK 50kW kW Output during peak is 50kW x $750/kW = $37.5k pa
- 34. Town X: large town supplied by gas Energy 9c/kWh Capacity $750/kW Solar Noon6am 4pm kW Off- PEAK Off- PEAKPEAK 20kW Output during peak with cloud is 20kW x $750/kW = $15k pa
- 35. Town X: large town supplied by gas Energy 9c/kWh Capacity $750/kW Solar Noon6am 4pm kW Storage can allow you to move output profile Off- PEAK Off- PEAKPEAK 20kW Use later = firm capacity $100k pa
- 36. Town X: large town supplied by gas Energy 9c/kWh Capacity $750/kW Solar Noon6am 4pm kW Storage can allow you to move output profile Off- PEAK Off- PEAKPEAK 20kW = firm capacity $100k pa Buy at 9 cents Use later
- 37. Town X: large town supplied by gas Technical • Removes reliability issues caused by cloud Commercial • Maximise avoided cost of buying from utility • Doesn’t rely on exports Models • Direct sales • Distributed farm on rooftops – “rooftops for rent” • Commercial property owners / managers Lots of PV can be installed
- 38. Conclusion We all need to think about change Alternative business model Lots of opportunity to maximise PV if we think a little differently Horizon Power ‘market enabler’ Alternative industry solutions
Editor's Notes
- Decentralised coordination of the system leads to higher resilience in a changing environment as it has more adaptive capacity over time Possibility that DG be more community owned The size cost disadvantage can be reduced if hundreds to thousands of individual customers all install distributed generation using standard practices Financing & management of this network of tiny resources may require an administrative and financial infrastructure of its own - More data query & analysis
- Make sure you mention that it is the same whether the PV generation is exported to the grid or not