Origin Energy understands its industry is being disrupted. In response the energy company has developed a strategy to ensure its survival as utilities transition from a commodity-driven model to a service-driven one.
Origin has created a Future Energy and Business Development division. Tasked with navigating the company through an uncertain period in utilities where new technology and new players threaten to upend traditional business models, the group reports directly to the CEO and its head of Future Energy, Cameron Briggs, works out of Silicon Valley to engage the insurgents behind much of the disruption.
During the AWS re:Invent conference last week Briggs spoke to Which-50 about why Origin Energy wants to be “driving the bus” during disruption.
“We made an active decision that we, at least to the best of our ability, want to be driving our destiny,” Briggs said. “Traditionally energy companies, by their nature, are quite conservative — people expect lights to come on and you’ll get incentivised to do that.
“But we recognised that if we were going to be ready for something that was pretty different we had to behave a bit differently to what we might have normally done.”
According to Briggs, the main changes — how customers are engaged and their role in producing power — means Origin will likely need to develop new products and services and double down on customer experience.
“We have to come up with products and services that we think will be beneficial to our customers whose expectation levels have gone up. We also think that the way you generate electricity is going to be different.”
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Briggs told Which-50, Origin Energy now “looks outside” to begin working with people and partners they haven’t normally worked with.
“Working with other people is going to make that transition easier,” he said.
Where the work occurs is changing too, Briggs said. Origin has a public cloud first strategy with the goal of transitioning many of its apps and workloads to a public cloud. Briggs said Amazon Web Services stood out as a provider for its innovative cloud services but more importantly it fosters a peer learning environment where AWS and fellow customers collaborate on solutions.
The deregulated Australian market where consumers can more easily switch providers creates a greater impetus for innovation than some of the vertically integrated monopolies such as in the US, Briggs said. However, innovation has been a challenge for industry incumbents, whose tight budgets are often more focused on regulation and reliability.
“Coming from an industry [like energy] that traditionally has been reasonably conservative, often the DNA of companies is to not necessarily try things that are particularly new,” Briggs said, noting Origin, a relatively young energy company, is more open to innovation than some of its larger peers.
But generally, energy companies are better equipped to deploy ideas rather than develop them, Briggs said. As such in-house innovation tends to be “inefficient” and partnerships become more of a focus. Although the history of partnering with smaller organisations “hasn’t been tremendous”, usually because of culture clashes, Briggs said.
In response Origin is now attempting to create a “safe-haven” for partners to interact. For example, Origin supports a global consortium of late stage energy sector startups called Free Electrons.
The idea is to give startups access to large corporates and their millions of customers but remove some of the traditional pain points of dealing with large corporates. While startups get access, Origin can tap new innovative technology and drive business value, Briggs said.
One early example has been the AI-powered energy demand bot developed by British startup Tempus energy. After successfully completing the first Free Electrons program, the bot, which shunts power demand to different areas to iron out price hikes will be deployed to Origin customers nationally, following a successful trial in Adelaide this year.
Partnerships like this —Briggs says Origin have several more — are an example of the new relationships Origin must develop as they transition to a service provider rather than a commodity trader, a transition that is being escalated by renewable energy and digital technology.
The rise of renewables and prosumers
Solar is now the most cost effective way to generate power, Briggs said. And he believes new technology can help with solar’s intermittency challenges. More consumers producing energy is decentralising power generation but the new players are not necessarily a threat to Origin, which is both a power generator and retailer.
“Our challenge, that we’re up for, is that we think that’s an opportunity for us,” Briggs said. “You can sit there and go it’s all gloom and doom but it’s going to happen anyway.”
Origin runs short energy, which means at peak times it must buy energy from other providers. Briggs says this puts Origin in a relatively favourable position if generation is further decentralised and consumers play a larger role.
But ultimately Origin will play more of a support role to help consumers generating their own power become “active participants” as well as assisting them in how they use energy.
“These [consumer solar systems] are energy assets that have to be maintained, that have to be looked after, that have to be used.
“Our job as an energy company [is to] help them do that in a better way. You can lower the risk and come up with creative products and services.”