Launched back in 2014, OhmConnect remains a rather unique kind of company. Its business niche is to encourage householders to unplug their electronic equipment during peak hours so as to reduce the need to switch on peaking power generation plant in order to balance the electricity grid. The firm pays its users in proportion to the energy saved in this way. In an interview with L'Atelier BNP Paribas, Curtis Tongue, co-founder and Chief Marketing Officer atOhmConnect, shared his vision of the future, both for the company and the energy sector as a whole.
L'Atelier : How would you describe OhmConnect?
Curtis Tongue : In a nutshell, OhmConnect pays people to save energy. Taking a step back, when we started out, we were looking for a way to reward people for taking action on climate change and reducing their carbon footprint. One of the easiest ways for people to take action is not to use energy when the peaker plant turns on. The California Independent System Operator (ISO), which runs the state's wholesale electricity market, would prefer to pay people to save energy rather than pay a power plant to produce more. If our users end up saving, let's say, one megawatt of electricity, California actually pays for 1 MW of energy savings, exactly as ifOhmConnect had generated it, just as if we were a power plant. Ultimately, it's the utilities – PG&E, SCE and SDG&E – that purchase our energy savings, just as they would purchase energy from a power plant.
The way it works is very simple. When the users sign up on our platform, they enter in their email address, they let us know what zip code they're in and based on that zip code we identify the utilities they are served by. The next step in the process is for the users to connect their utility account, authorizing OhmConnect to have access to their smart meter data. So we can see on a 15 min level, for every one of the users, what their energy consumption is. That's how we'll be able to measure it and pay them for the savings they made on their expected energy consumption. All this smart meter data is supplied when the user authorized us to access that data. When the electricity generating companies are about to turn on a peaking power plant, that's when we send an invitation to all our users telling them: “Hey, this is a great time for you to save energy.” And if enough of our user community saves energy at that point, that power plant doesn't need to turn on. This has a huge carbon impact: it results in a large amount of environmentally-damaging pollution being avoided because of those peaker plant not being admitted to the grid.
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What has changed in our approach since we first started is that we finally realized that, in order for us to have the impact we want, to have a community who save hundreds of megawatts or even gigawatts of energy, we need to appeal to the mainstream audience, consumers. So our challenge became: “How do we frame energy saving in a way that is acceptable, understandable and fun, in a way that no other energy company has been able to do?”
for a big house with several energy-consuming devices
Since then, we've been very focused on building a streamlined, easy-to- use, fun, sticky, very gamified experience that makes it social, that allows people to see their collective impact, that allows people to kind of participate with their family. I think that's very insightful and I wish we'd had this insight a little bit earlier. When we started, we initially thought that these energy savings events were potentially a burden for people, that we were inconveniencing our users, that when we said "Hey, can you save energy from this time to that time? That would be great,” they were gonna have to put off things that they wanted to do.
And we actually failed. We should have connected the dots a little bit earlier because the most frequent question put to us was: “Can I control what amount per month I will receive? Can you help me to kind of map out the amount I'm gonna get?” What we found is that users don't view these events as a burden, as a chore. They really look forward to these events, and there's a couple of reasons for that. I think the first reason is that a lot of people look at these events as an excuse to unplug the TV and read for a while, or play board games, go outside, go for a run and do things that don't require very intensive energy use. That's when we really started to buildup on the gamification element.
And presumably this requires the sort of partnership that you've recently formed with Centrica Hive?
Precisely, Hive is a perfect example. We're seeing an increasing number of users who have smart speakers, smart thermostat, smart home hubs, smart WiFi plugs, smart lights, etc. So we have companies like Hive which reach out to OhmConnect, and we find this perfect synergy with these customers with their smart homes – so there's an increase in convenience, there's novelty. There’s now a way for a customer to be able to come back home and the home can automatically configure itself to the time of day – which is really cool in itself. But there's an additional opportunity: smart homes are able to respond and adapt to real-time conditions on the grid. The home may be able to reduce its energy consumption by 25% or even 50%. Through partnerships like Hive, we're able to have users with smart homes respond adaptively to the grid, to provide economic value to the user and also provide environmental benefits to the community and to the grid, without those peaker plants having to run in the first place to balance power demand because the smart home system will put off switching on the washing machine, dishwasher or plugging in their electric vehicle.
A customer can change their utility supplier once a day for an entire year and still have new ones to sign up with.
This growth in the Internet of Things (IoT) is one of the two macrotrends we're seeing sweeping across the US. Coupled with the fact that there's a lot more customer choice and a lot more retail competition for every aspect of their energy usage. In California, for instance, there are three primary utilities (PG&E, SCE and SDG&E), but there are a lot of others from other states as well. A customer can change their utility supplier once a day for an entire year and still have new ones to sign up with. In California, there are also additional utilities popping up. So customers have a choice now: stick with, say, PG&E, or have an alternative that sources all their energy from clean renewable sources.
SMARt THERMOSTATS TO SAVE ENERGY
You launched OhmConnect in 2014. So what has changed over these four years?
Well, IoT is definitely one of the major trends. When we started it was mostly focused on smart thermostats and plugs, more of a convinced audience. Since then we've seen companies and services like Hive which have come in, in a very consumer-friendly manner, offering an array of smart devices that cover all aspects of the user's home and home life. This has really helped to make smart homes more accessible to the mainstream audience and mainstream consumers. And also, you know smart speakers weren't really around when we started off. Alexa and Google Home have really kind of reduced the friction – that entry barrier for the smart home – for a lot of people and through them people just started to key into the benefits and the convenience of the smart home. Just starting with a simple speaker, they then start bringing in the thermostat, and plugs, so I think that's what has changed significantly since 2014. I think another thing that has helped significantly is that people are getting more comfortable with the idea of having a third party like OhmConnect being able to pay them for changing their energy behaviour. So while California is a little unique in that we're still predominantly three big utilities, we've made a lot of progress on priming California's utility customers to be comfortable with the idea of interacting with energy companies and services outside of this utility umbrella that are able to provide additional services and additional value to them. Because that category awareness of energy sharing – the idea of being able to get paid for making smarter energy decisions for saving energy at the right time – has helped us tremendously.
What are your ambitions for the next five years?
The future holds a couple of goals. The first is a national expansion. You know we've made great progress in California but I see a lot of other markets like New York, Chicago, the Eastern Seaboard, Texas and Toronto, where there's a lot of opportunity for us. We do have a program that's available for everybody across the US, where we'll let them know when they're using energy from a dirty power plant or from renewable resources and give them the prices – to enable them to save energy at that right time but to be able to have this direct payment for energy savings, in other states. That's a big part of the future for us.
Another thing we have our eyes on for the next five years is to continue that IoT trend, ride that smart home wave. We see more and more homes becoming smarter, with these new devices that are being connected and can respond adaptively to the grid, and we can only see that trend accelerating. So as that increases and that's kind of our national footprint, where we're able to extend out to other states – that's what we're really gonna have our eyes set on for the next five years.
SAVING ENERGY is good fOR THE PLANET AND the WALLET
How do you see the future of the energy market?
Looking across the US, we see solar and wind and renewables becoming a bigger and bigger percentage of US power production. While, there is a certain volatility associated with these sources – solar for instance, there's obviously a time of day when the sun goes down and there's a drop in solar production. And it can be unpredictable. So an unexpectedly cloudy day or stormy day can also have an unexpected impact on the demand for energy, if there's been a lot of solar backed up. The same with the wind: that energy production can also drop unexpectedly. With services like Ohm Connect, we're able to respond quickly enough to address some of those energy production shortfalls. We monitor the grid and when we see there's a spike in demand in a particular area – a supply-demand imbalance – services likeOhmConnect are able to help bridge that gap. As far as renewables – solar and wind – are concerned, I can only see that trend increasing, microgrids also, more customer choice, additional utilities popping up. So I see services like OhmConnect becoming more integral, more central to managing those supply-demand imbalances.