Solar and software power the energy transformation

Some 2.5 million households have already moved to solar.

Energy Australia’s decision to close Yallourn four years early has underlined the transition in the energy industry — and the sooner it happens the better it will be for all Australian industry.

Some 2.5 million households have already moved to solar including Origin boss Frank Calabria, AGL’s Brett Redman, and EnergyAustralia’s Catherine Tanna.

Together with industrial use this has increased supply, while a mild summer and COVID have helped push wholesale prices down by two-thirds in 12 months.

No one in the industry is looking for a bounce any time soon, which explains why Origin and AGL have posted negative returns of 24 and 43 per cent respectively in the past 12 months.

Origin is long gas as the transition fuel, but it’s the work being done by the retail team under John Bowie through its Octopus deal which has at least opened one door to the future.

It’s now 12 months into the transition and Origin has transferred 63,000 customers onto the platform, on route to 225,000 by the end of June and 3.8 million in the 2023 financial year.

In a sea of red, Kraken and Octopus Energy have been a bonus, since the $507m deal for a licence for the Kraken software and a 20 per cent stake in the parent company.

The aim is to have a team of 10 looking after about 60,000 customers, so when you ring with an issue you are a good chance of getting the same person responsible for all your energy needs.

The first Retail X team is moving into the Lonsdale Street offices in Melbourne, where the software developers are based, as part of the internal cultural revolution.

The Kraken software is aimed at helping roll out new products and flexibility, like 30-minute visibility on power so you know what you are using when.

This is being aided through the Octopus acquisition of New Zealand software developers at Marvel Labs and other innovations like the Fan Club, which tells you when the wind is blowing hardest to boost generation.

Origin has talked up cost savings from the venture, starting with $75m in the 2022 financial year and $125m a year from 2024.

It takes an estimated 12 minutes to do all the talking to get the power company to change you to your new address, and under Kraken the team will have you underway in under five minutes through its digital system.

If Octopus is as good as the talk then Bowie’s team will actually be boosting revenues — not just saving money — because the internal cultural change will help change external perceptions.

Given the scorn turned on big energy from federal minister Angus Taylor this would be nothing short of revolutionary, but at least Bowie and Calabria are drawing a new line in the sand.

Financially they are ahead given Octopus is adding customer numbers through a Tokyo Gas deal and its market value has increased over the year from $US1.4bn to $US2bn, putting Origin’s stake at up to 8 per cent at $US400mn.

In the US, the Justice Department and 11 States have taken action against Google on a similar issue. Picture: Bloomberg

An Epic battle

The contrast could not be more vivid between the ACCC’s well-based concerns about the lack of choice on internet searches and Epic Games founder Tim Sweeney, who now has antitrust actions filed against both Apple and Google over their operating system controls.

Both actions are before Federal Court Justice Nye Perram with the second against Google filed on Wednesday.

There is a difference between a study to explain how the monopoly power works and actual litigation to attempt to break open power.

Apple and Google control the operating systems in over 90 per cent of mobile phones and use this power to charge app developers 30 per cent of revenues.

Google pays Apple $US10bn a year to ensure its search engine is at the top of the search list on Apple phones.

Last century, the concern was control of railroads.

Today it’s mobile phone operating systems, because they provide the tracks that allow developers to market their goods.

In an interview with The Australian Sweeney said: “If the World Wide Web was not invented today Google and Apple would not allow it to start.” His concern is that “they have good operating systems but they shouldn’t be allowed to control the app store and payments, which are two different markets”.

Epic created the Fortnite computer game which has made Sweeney billions of dollars, but he said his concern was the operation of the market and the ability of newcomers to start.

Asked about the slow reaction of antitrust regulators, Sweeney said: “The wheels of justice turn slowly and I hope they will act in this area, but as a private company I can move faster.

“The way Google and Apple operate they take all the profit margin away from newcomers, collecting advertising fees, ­controlling search solutions and then imposing a fee on distribution.  

“For most people innovation comes from competition.

“This is about a lot more than games, which themselves have become social experiences,” he said.

“The platform taxes stifle innovation.

“They take away any profit from development.

“In the absence of Google‘s anti-competitive contractual and technical restraints, app developers would have a greater ability to distribute their apps, in turn leading to increased competition and innovation to the benefit of Australian consumers.”

He argues that “app store operators such as Google must operate in a manner that does not restrict competition, and facilitates fair access and choice, consumer value for money and innovation. Currently it is clear that Australian consumers are being deprived of innovation and pricing competition that would otherwise be present in a competitive market.

“Google often puts developers in a position where they must forego substantial revenue, reduce the quality or quantity of their apps, and/or raise prices for consumers or otherwise render apps financially unviable.”

The ACCC said in a statement that it was “seeking submissions from consumers and industry ­participants about choice screens, which give users a choice of internet search services on mobiles and tablets, rather than a preselected search service, and about the supply of web browsers in Australia.”

The action comes as the ACCC also finalises a draft report on mobile apps which is due to be submitted at the end of the month.

Its work on screen choice and follows similar action in the European Commission, which has met with obvious derision from Google.

In the US, the Justice Department and 11 states have taken action against Google on a similar issue.

The case lodged last year said Google had illegally maintained monopolies over online search and search advertising through agreements intended to prevent competition.

“As a consequence, countless advertisers must pay a toll to Google’s search advertising and general search text advertising monopolies; American consumers are forced to accept Google’s policies, privacy practices, and use of personal data; and new companies with innovative business models cannot emerge from Google’s long shadow,” the action said.

The combination of private actions from the likes of Tim Sweeney and the work of regulators have so far not touched the power of the platforms, but the wheels are turning.

The combination of private actions from the likes of Tim Sweeney and the work of regulators have so far not touched the power of the platforms but the wheels are turning.