Imagine trading energy with your family or best friends or next-door neighbour.
That’s what Fred and Eglantine Oualid are hoping to do as soon as next year.
They don’t have a solar system but are strong believers in renewable energy.
“We like to choose where the energy comes from and who gets our money for it,” said Fred Oualid.
He finds dealing with the big energy providers frustrating and is unsure where his energy comes from.
“There’s a lack of transparency for sure. A lack of trust as well and misleading information.”
Fred and Eglantine have signed up to trial and eventually use Local Volts, an energy trading system which doesn’t require anything more than a mobile phone or computer.
“It’s connecting people together that have the same ideas. I think that’s a really important factor,” added Eglantine Oualid.
Local Volts founder Jitendra Tomar describes his system as the eBay of energy trading.
His company will take care of the regulatory requirements, the licences and the bureaucracy.
Households join up for a flat annual fee and trade energy, whether or not they have solar systems or the capacity to store electricity.
Buyers will be able to get their energy from anywhere – the big energy retailers or their next door neighbour who might have a solar system with batteries and excess energy to sell.
“There’s no transparency at the moment,” Mr Tomar said.
“The big power companies simply set a price and consumers have no way of knowing the real cost.
“Local Volts will increase competition and consumers will see the real cost of that energy.”
Mr Tomar also said trading can be tailored to be as simple or complicated as individual consumers need.
Surging power prices prompt search for alternatives
The search for alternatives has been stepped up by news households are facing massive increases in electricity prices.
“We’ve seen a very quick rapid surge in solar system installations in response to media reports,” said Tristan Edis, the director of policy and analysis at Green Energy Markets.
Giant German energy company Sonnen is a much bigger player hoping to exploit consumer anger and dissatisfaction.
Sonnen has partnered with South Australian energy company Zen to take on the big energy retailers.
“The rest of the world’s going in a direction of consumers playing a much bigger role, demand management playing a much bigger role and this way we can end up with a cheaper grid,” said Zen Energy’s chairman Ross Garnaut.
“At the moment, Australia has a very expensive grid. It’s hard to find another one in the developed world anywhere near as expensive for the amount of electricity we put through it.”
A Sonnen battery will cost around $8,000 but, once installed, members of the “Sonnen community” will be charged between $30 and $50 a month for all their energy needs.
In exchange, the company will have the right to sell any excess power into the grid.
Tristan Edis said Sonnen wants a share of a lucrative market dominated by the established energy retailers.
Sonnen can use the battery at times when it is being underutilised.
It enables Sonnen to participate in selling some of the capacity in that battery to either an electricity network or to the wholesale electricity market where they can exploit large premiums, while the householder effectively does not even notice.
Richard Martin’s giant 10 kilowatt solar system makes him almost immune to the price hikes.
He is his own power plant, with plenty of excess energy to sell, but the big energy retailers are paying him a pittance for it.
“We’re in the situation now where we’re generating power, it’s just not recognised as a valuable commodity,” he bemoaned.
Richard Martin plans to add batteries to his system, store the power for himself, and leave the grid.
But that will prevent him from joining the push for individual households to be part of the energy trading market, free from the dictates of the established power companies.
The prospect that households could become more active energy traders in the not-too-distant future changes the idea of what it means to be independent. It makes the national grid even more important.
“The only requirement we have is that you have to be on the electricity grid,” explained Mr Tomar.
“Where you’re living you must be connected, you cannot be an isolated system.”
David Martin at Power Ledger is already testing a system giving households more control.
His software enables consumers in groups of apartments or commercial properties to sell excess energy from their solar systems to their neighbours.
“Consumers really don’t have to do anything at all. They log into the system, they pre-purchase their electricity, and then the system does all of the trading for them,” he said.
The establishment of energy communities will help to reduce pressure on the grid at peak times, and prices should reflect that.
But it will be easier said than done, according to Ross Garnaut.
“Then we’ll actually bring the cost of the grid down. Now that won’t be easy, that’s hard policy,” he argued.
“Very strong vested interests will have to be confronted. [Chief scientist Alan] Finkel mentioned in his report that it’s going to be important to look at writing down the sunk cost in the grid.”
Regulators have guaranteed grid operators their revenue – so when demand falls regulators have sanctioned price increases.
“They’re almost like a casino, they always get their money back irrespective of how stupid their decisions are,” said Tristin Edis.
That will have to change.
Energy retailers making big profits on reselling energy fed into the grid from households will also take a big hit as trading platforms unleash competition and improve transparency.
As electricity prices skyrocket, motivated consumers are cheering on the disruptors.
“You don’t have much power as an individual. Certainly the larger companies have a lot more power than we do,” said Richard Martin.
The established players will not give up their profitable privileged positions without a fight.
The question is, will the fight mean lower costs for households or politicians pushing back against consumer-led change.
Too good to be true? Find out and comment below.