Californian start-up OhmConnect to ‘shake up electricity markets’

US company and Origin Energy to launch Spike, with gamification, PayPal and gift card rewards to encourage households to cut energy use.

Cali start-up OhmConnect to ‘shake up electricity markets’

The brains behind social network hits Farmville and Words with Friends have a new target in their sights: Australia’s energy industry.

OhmConnect, a Californian start-up, is aiming to shake up electricity markets by rewarding customers to reduce their energy use during periods of peak demand.

The US company has partnered with Origin Energy, Australia’s largest power retailer, to launch Spike, which uses gamification and PayPal and gift card rewards to encourage households to cut energy use.

When California was hit by blackouts in August following a major heatwave, OhmConnect called on its customers in the days after to cut demand which it says helped to keep the lights on.

California, like Australia, is in the midst of an accelerating transition to renewables. But its power grid remains vulnerable during extreme weather and peak demand, with tech solutions like OhmConnect playing a small but growing role in easing stress on the power system.

OhmConnect’s 150,000 customers reduced the equivalent of two peaker gas plants of generation during the Californian summer, numbers which it says could eventually be eclipsed in Australia once Spike gains traction.

“In mid-August we had a big regional heatwave all over the western US with high temperatures and during that month we recorded the highest temp ever in the world of 130 fahrenheit (54 degrees celsius) in Death Valley,” OhmConnect co-founder Matt Duesterberg told The Australian.

“It was super hot and really drained our resources. We have a tonne of solar on our grid and when the sun goes down we need a lot of fossil fuel power so we import all this from western region. During the heatwave, everyone else needed this power and so there wasn’t enough for California. So on subsequent days we were asked on multiple days to show up and make sure lights stayed on with our users voluntarily reducing their power.”

Duesterberg started off his career as an electricity trader nearly two decades ago and could see the tech opportunity emerging as power grids moved to a greater focus on digital tools along with the increasing penetration of solar, electric vehicles and batteries.

“I realised there was a big gap in the market which was how do you control electricity when you have more and more variable supply — more solar and wind on the grid. I thought that was going to be a big problem so started OhmConnect in 2013 and was looking to encourage people to change their behaviour on how they use their electricity to help match the needs of the grid and reward them for doing so.”

Part of the tech upstart’s approach was to bring in developers and engineers from Zynga — maker of one-time internet gaming hits Farmville and Words with Friends — along with talent from financial services operator CapitalOne, Google and LinkedIn.

“We’ve brought in a bunch of people who are behavioural scientists at heart and who came into this industry to build a platform that really encourages users in a way that hasn’t really been done by this industry before.”

“What they think about is when can we capture a few minutes of your day. And they’ve even drawn charts like here‘s this little wedge of three minutes when you’re standing in line and could you participate in something productive like changing your electricity settings. And so really focusing on building an experience around the consumer and having the consumer placed first. We then brought in an underlying tech platform and churned out pretty good results in consumer performance.”

OhmConnect co-founder Matt Duesterberg

Origin first established its relationship with OhmConnect through its role as a co-founder of Free Electrons, an energy innovator that seeks to pair big utilities with tech start-ups like OhmConnect.

Tony Lucas, Origin’s head of future energy and technology, met with Duesterberg in San Francisco and was initially wowed by their customer satisfaction rating which far outperformed any Australian equivalent.

After several years of talks the two entered into a formal tie-up this year, with Origin rolling out the Spike product to customers through a soft launch in August. Households need a digital or smart meter that can be read remotely to take part with 20,000 customers signed up to date.

Spike members receive a text message where they are invited to cut their energy use during a “SpikeHour” by switching off lights, pool pumps and turning down airconditioning and holding off using washing machines and dryers. Smart plugs and aircon controllers can be added on automated settings to help reduce households’ power use.

Members who routinely lower their energy use by 60 per cent during SpikeHours can earn $250 a year in rewards, according to Origin.

Lucas sees it as another step in the evolution to generating more power capacity from homes and businesses, building on virtual power plants where a network of small-scale solar and battery systems can be controlled and fed into the electricity grid.

“Spike is only at 20,000 customers so it’s not going to make or break a summer,” Lucas says. “But you can imagine as you bring on more users, we can move discretionary demand around helping us to better integrate renewables and not rely so much on firming generation.”

The OhmConnect partnership is the latest move by Origin into the digital world after spending $500m for a stake in UK electricity disrupter Octopus, a fast-growing tech start-up with ambitions to become “the Amazon of energy”, while also rolling out its retail platform in Australia as it seeks to add automation and cut costs.

After a rough few years for Australia’s power industry amid high prices and a pitchfork battle with the federal government over regulatory intervention, big retailers like Origin now hope the world-leading take-up of rooftop solar among Australian households will spread to products like Spike and in the long-term to an increased uptake of batteries and electric vehicles.

Still, gaining that trust between power companies and their customers still has some way to play out. But Origin is confident it remains on the right path.

“Eventually we would like to get to the point where we are interacting with customers and managing their energy demand closer to their homes.”

OhmConnect’s co-founder thinks the product could gain mass appeal as the tools to engage with power savings become easier to use.

“We see this as a mass market product. We expect 50-60 per cent of customers could sign up for OhmConnect or Spike,” Duesterberg says. “There is some behavioural component to it — everyone now does recycling and 20-30 years ago you didn’t do that. It’s about making it easy and placing the consumer first.”