The Apple-ification of the Energy Industry

LinkedIn – Kenneth Munson Published on August 28, 2016

Apple’s App Store changed the marketplace for applications by creating a revenue-sharing model that gave even the smallest developer a potential marketplace of millions.

What if Apple did the same thing for energy and created a store where you could sell some of your home’s solar power when it was in highest demand

That’s a distinct possibility, as this article in the Motley Fool suggests, and it would represent the natural evolution of today’s Net Energy Metering (NEM) models. With legacy NEM programs disappearing in many places, we could instead see the development of a new marketplace for power. Truly intelligent storage that is both integrated with utilities and capable of being aggregated into a virtual power plant (VPP) is the key to providing value for the next-generation grid.

Apple has received a wholesale energy designation from FERC, making the company’s energy arm, in effect, a utility able to sell power to wholesale customers. Right now, the main customer for the power it is creating from new solar farms is Apple – no surprise, given the power it takes to run the mega-scale servers that drive the App Store. But there’s no reason Apple couldn’t market power to other customers in the future – including selling power obtained from storage systems that can be linked into VPPs on a scale that makes sense from a wholesale perspective.

At the same time, Apple is moving aggressively into smart home management with its HomeKit, one of a growing number of “meta-hubs” that are largely focused on managing home energy. These hubs can control lighting, heating, cooling, and various appliances plugged into smart outlets, as well as monitor the energy used by each device. So it’s fairly easy to automate the process of demand management in the home on a micro level.

Put all this together, and you start to see a pretty sophisticated system that would make it possible for almost any homeowner with DER and storage to turn their renewable energy system into a revenue stream. The “iEnergy Store” would buy the excess power (as happens today with NEM), but as part of a VPP that would aggregate enough energy to be readily resalable. The resale revenue would be split between the aggregator and the homeowner.

Meantime, the home automation system is managing each of devices and smart home systems to maximize the power available for sale (while still letting the homeowner set key parameters).

Think about what would be possible if a model like this became widespread. There would be competitive wholesalers like Apple out there (like there are competing app marketplaces) willing to bid to be the aggregator of the power available from your storage. Software platforms would conduct the bidding and lock in the best offer for your individual situation. The grid operator would earn revenue. All this would happen without homeowners doing anything, or worrying about anything except the monthly payment from the aggregator.

As The Wall Street Journal’s Christopher Mims observes in his recent column, services are what consumers (and businesses) really want delivered via the cloud. He calls services the “killer app of the Internet of Things” and that extends to the future of the grid. It will transform from a way to push electricity down a wire into a network that ties together in-home devices, DERs, and traditional generation with a wide range of services for users (who also become suppliers).

We’re no longer talking just about storage delivering reliability and cost savings for individual homeowners, but how storage and intelligence will fundamentally rewrite the rules for the electric power marketplace.

By Ken Munson, Co-founder and CEO of Sunverge Energy