We sat down with Oxamii’s Aaron Yew, who looked at the energy sector in Australia and saw a chance to (literally) bring power to the people.
‘Energy’ is in many ways a hot button topic. Not only in its availability, but its sources, and its cost. What inspired you to get into this field?
After 100 years of the grid essentially working the same way, solar had the potential to change this status quo and usher in new business models around energy ownership. Seeing the advent of rooftop solar and the potential for small scale solar on unused land I had the idea that anyone could become an energy generator and sell their energy to anyone. Google kicked this off as they were building massive data centres that consume huge amounts of energy. They were looking to reduce their energy costs and their carbon footprint and entered into long term agreements to buy their energy directly from wind and solar farms through ‘power purchase agreements’; a contract to buy energy for a fixed amount of time at a fixed price. This is how most of the largest companies in the world now buy their energy. Unfortunately, small businesses and individuals don’t have access to this, which is where the inspiration came to allow more small-scale generators to enter the market and sell directly to customers.
How do you see ‘trust’ being built into the energy production and supply market?
Trust in the energy sector is quite low. You never hear anyone say “I just love my energy provider” the way they might about Apple or BMW. Until now, energy has been dirty, generic and self-serving, we want to become the trust conduit that links people directly to their energy source and put a face to your generation. Communities inherently trust each other through their shared affinity for the people, places, and activities that make up a community. I think there’ll be towns and small cities that will rally around local energy provision, but the network effect for Oxamii is such that it could connect the generator to the customer regardless of proximity.
Until now, energy has been dirty, generic and self-serving, we want to become the ‘trust conduit’ that links people directly to their energy source and put a face to your generation.
What role do you see Oxamii playing in the energy market?
An energy marketplace connecting customers directly to small scale generators. Airbnb allowed you to earn money from renting empty rooms; eBay created millionaires from people selling stuff from their garages. They did this using technology to efficiently match buyers and sellers. They disrupted traditional industries by providing a platform that connects customers and independent service providers. Decentralised energy generation has the potential to disrupt current models where an Airbnb-like platform can aggregate thousands of individual generators and connect them with customers who can easily and conveniently purchase energy from a generator of their choice. It’s an idea we’re dubbing the “People’s Grid”. By allowing generators and customers to connect via their shared values, community and affinity, they are engaging in a network – both people and energy – which can and will grow exponentially. By having a great experience with your energy provider, you are likely to support, promote and share them. This helps the People’s Grid to grow organically and not just via infrastructure.
How important a factor is ‘community’ in Oxamii’s approach to energy?
Community is what Oxamii is about. We coined the term ‘The People’s Grid’ because we truly want energy to be owned by the community and allow the benefits of energy to accrue back to the community they serve, not big business.
What have been some of the most important things you’ve learnt since co-founding and being the director of Oxamii?
You need a good team. The success of a company is the direct result of the people in it all working towards a common goal. Find and surround yourself with good people and then let them do what they do best. We are only a young company, but everyone who has joined the Oxamii team is talented and very passionate about what we are doing.
What are the most important factors in play in the energy market which influence how Oxamii operates?
The problem we are looking to solve in the energy market is, how do you take the energy market from a centralised and vertically integrated business model, and transform it into a decentralised – smart business model? The first step is to give customer options in from whom, and where they buy their energy. This will enable anyone to become a generator and allow anybody to buy energy from them. The idea of the people’s grid is the antithesis of big energy. It is monopolistic by design and stifles real competition. The Peoples Grid is built for everyone. Buyers don’t look at energy as just an essential service provided by “them”, but as a way to connect to the community through their supply chain. Imagine building a solar farm and selling energy to students’ homes. A local council wants to entice a large business to the region by subsidising their energy for a year or residents are just sick of big energy taking the money out of the community and they would prefer that money goes to a local farmer. When you start putting a face to energy generation, energy becomes about a connection. This enables hundreds of thousands of independent local generators to enter the market. Something they can’t do on the old grid.
If there’s interest in someone becoming an energy producer or supplier, what kind of financial investment are they going to be facing?
The energy and power industries are changing. You could imagine Oxamii as a ‘retailer in a box’ solution. Without our energy marketplace and matching software, small scale generators only have one choice: sell their energy into the wholesale market. The problem is the price is variable and at times negative, meaning you are paying the market to generate electricity. To overcome this, large generators have long term contracts with buyers that locks in a price they sell their energy for and makes their projects fundable and viable. Small generators in most cases don’t have access to long term customers. You can’t imagine the local pizza shop entering into a twenty-year fixed energy contract, it just doesn’t work. We’ve looked at the small-scale market and a better way for customers is to buy energy on one-year terms and locking in that price with a generator. The generator can sell their energy to a customer on the Oxamii Platform and receive significantly more for their generated energy. For example, power purchase agreements are in the vicinity of 6-7c per kilowatt, on the Oxamii Platform generators earn 10+ cents. A win-win situation for customers and generators.
Who do you think will benefit most from taking a different approach to energy production, resourcing, and supply?
While it’s natural to think that millennials and more ‘green-minded’ people are obvious customers, the fact that Oxamii trades on affinity, community, values, and connections makes anyone a potential generator or customer. Oxamii allows disused land to be used as a solar farm, excess roof space on a factory can become a generating unit, a farmer can use the energy from his solar farm to power on-site pumps, a renter can have part ownership in a community solar project that now powers their home.
There’s bound to be cynicism about the feasibility for a set up like this one. How’s it going to work, and be reliable?
We’ll be partnering with a licenced electricity retailer for compliance and regulation, and any shortfall in electricity – say, at night-time – will be supplied by them, so customers can be assured that they will always be supplied electricity 24 hours a day. From a technical perspective, the mechanism for electricity is the same as how you buy energy now. All generators’ (coal, gas, renewable) electricity goes in a wholesale market, is transported by poles and wires to its destination. An electricity retailer will make its profits by purchasing energy from a generator or the wholesale market and makes a margin on that electricity they sell to customers. The difference between Oxamii and a traditional retailer is that a customer can preference the electricity generator they want to buy their energy from and Oxamii will facilitate this transaction. The generator will be paid the price they set with the matched customer and all the transactions will be handled on the Oxamii platform.
Do you foresee any resistance – bureaucratic or otherwise – preventing Oxamii’s business model from really catching on?
Electricity has a lot of regulation and it’s been dominated by big energy for a very long time. Any business model that is disruptive to the status quo will cause big energy companies to become defensive and possibly use regulation to stifle competition. We understand the risk that this may occur, but where we see a defence to this strategy is to use people power. When local governments, companies, and individuals as generators are earning new revenue streams they previously didn’t have access to, people power will rise up and defend against over-regulation to protect their new revenues.
Do you want to inspire this kind of enterprise in other countries as well?
When we talk about our vision for anyone to become a generator, we truly mean anyone in the world, not just Australia. Our goal from day one is to be a global company and this ambition hasn’t changed. We have deliberately developed a Business model that can scale globally but first, we want to prove it in Australia. Globally, energy is dominated by big energy and we want to create a global people’s grid. A technology platform we believe is the best way to do this through the Oxamii Energy Marketplace.