Paul Phillips is an entrepreneur who has recently launched We Are Energy. We Are Energy is a new green energy services co-operative, designed to give every household and business the opportunity to generate, store and control their own renewable energy at No Upfront Cost*. We recently spoke to him to learn about the reality of launching a low-carbon solution and the adoption challenges he sees.
Hi Paul, congratulations on a fabulous innovation and it is very exciting to see a service model that aims to address so many of the challenges we have been looking into. Great to have the chance to discuss the real-world challenges you face.
Can you tell me a little bit about the launch of the We Are Energy new co-operative business model in the face of big incumbents and old fossil fuel ways of doing business?
There’s large inertia to overcome in the energy utility business both for consumers and suppliers. Consumers for example face constant nudging from the comparison sites and even Ofgem to get them to switch energy suppliers. The inertia breaking requires, as you say, a focus on the motivational opportunities when trying to introduce new low carbon solutions – how we address and increase relevance. In the case of We Are Energy, we’ve tried to address this by offering no up-front costs and a price promise with instant savings on top of the obvious carbon savings and help to fight the climate crisis.
Are you seeing practical barriers too? Do customers need more support to understand the model and the technology etc? How are you dealing with that?
It’s true that the practical barriers need breaking down for consumers – especially in these new covid times where people don’t want strangers coming into their homes unless it’s an emergency.
They also want to ensure they are buying into the latest technologies. So, we are planning on installing the very latest photovoltaic panels – the most efficient and smallest panels we can find as well as the largest capacity battery that our model can support.
We also need to help the consumer understand the model though this seems less of an issue than persuading them to think and act with a more long-term perspective to really appreciate the benefits that we are offering them and the next generations.
Fascinating to see how with motivation it is not just the unknown nature of a new concept that is a barrier, but the ways established businesses keep hooks in customers. You are trying to counter that with a cooperative model right?
Yes. But it’s too early yet to tell if the offer of part ownership in the business and the future dividends that come with being a co-operative member will be enough to help ‘jump the chasm’ to becoming more mainstream. Despite a long history of co-operative businesses in the UK, there aren’t that many successful examples in the world of consumer utilities so far.
Finding ways that we can work together with finance and suppliers to reduce the term of the contract so the co-operative model can work harder are also potentials. (Though this will become easier once we gather momentum and build market share).
Considerations like open-sourcing our model and/or franchising it to help others build this new market model are potentials to help break the current established way of doing business.
Moving on from customers, how is it going with trying to deliver a new model in the market? Are you finding suppliers who you can work with – is that also a challenge?
It’s correct to say that new solutions suffer from less mature networks etc. Indeed even Tesla, for example, were unable to say if they could meet the demand for batteries we have been modeling if the business grew at the very modest rates we are aiming for! So yes solution eco-systems do need building at the same time.
So far our experience with suppliers has been very positive. They have all been keen to partner with us and applaud the model that we are promoting. It’s not surprising considering we are looking to grow a market that has recently stalled – due to the removal of the feed-in tariff incentives and the coronavirus issues too.
We’ve been building collaborations with new suppliers too as we look to find alternative solutions to use the excess solar energy each installation will generate. New heat storage batteries, fuel cells and hydrogen boilers for example. These businesses are also at very early stages so we look forward to growing the market together and building new solutions based on real-world needs.
We’re offering our suppliers co-operative membership too as an extra incentive for helping grow the business and continuing to innovate their services as well. (Persuading the FCA that suppliers could be part of this multi owned consumer-led co-operative model was part of the reason for some of their delays!)
I was excited to see that the core of your model aims to resolve the financial barrier for customers – how are you making that work?
The existing financial barriers are considerable but by innovating with the business model we’ve been able to find a way that is sustainable once we get to a smallish scale – mainly through generation at the point of consumption which avoids many of the network and distribution costs that come with being a player in the current supply market. And thankfully we have been able to access low interest rates now and in the foreseeable future to enable the model to work as well.
And with scale, as you say, comes the purchasing power to help with supplier investment and more competitive supply chains. All things that are only just becoming possible even though solar PV is now 20 years old…
We’ve been considering ways to reduce the contract length with options for part finance by the customer and these could also help with adoption for those that don’t feel okay with making a commitment beyond the current normal maximums of 1-2 years.
The research I have been reading says that financial barriers are not the only systemic barriers but regulations and other institutional challenges exist – what is your experience of this?
Also worth noting that in a regulated market with an independent regulator like Ofgem and a massive slow-moving government body like BEIS, it is a very bewildering and complex world to get involved with for anyone wanting to innovate in the market.
Getting to grips with the wholesale part of the market both in relation to the regulated supplier rules and conditions like the balancing and settlements code which are managed by Elexon – a separate body that administers, monitors compliance and then balances and settles the electricity market – or the host of other rules that Ofgem manages, has been an illuminating experience.
But I have to say that Ofgem have been very supportive and generous with their time. Their innovation unit team and innovator sandbox was very helpful. In fact, they’ve just enhanced this support with the launch of a balancing and settlement sandbox together with Elexon so innovations can be trialed in a live market environment without having to first meet all the usual electricity codes.
We have been very challenge focussed here so perhaps we can end on an upbeat point – what do you see as the vision for the business and specifically what do you think will be the critical factor that leads to success?
The vision for We Are Energy Co-operative is a world where everyone lives, works and travels in places where their surfaces are capturing the suns rays to power our world, where energy poverty is a thing of the past and where we enjoy a sustainable, clean and healthy environment across our planet.
The critical factor for the success of this vision is not technological but will rely on a new perspective from consumers – one that takes a longer-term view beyond simply the need to save money in the present. One that’s coupled with the desire and motivation to act for a better future.
But I truly think the time is now for a business like ours. From the voice of the youth to that of the United Nations, the 2020’s are really the decade of action.
Do you want to know more about the design for adoption of low-carbon solutions? Read our article here .
* No Upfront Cost means you pay nothing to install our standard solar generation and battery storage system. Just pay for the energy you use, just like you do now. And save 16 tonnes of CO2 over the first 10 years