"To say it's in jeopardy is probably understating it," he says. "I think the incumbent players have continued to extract massive amounts of money out of this industry." Describing last week's Government energy package as a non-announcement, Blincoe says the industry needs to put affordability front-and-centre.
"You'd have to be living under a rock not to have noticed that our industry is pretty screwed," he says. "Personally, last winter was the turning point for me, having spent 20 years trying to, I guess, advocate for more affordable energy in New Zealand. You know it's a long hard road, 20 years banging your head against that brick wall."
Supa
Until October last year, Blincoe was the chief executive of load-shifting-based electricity retailer Electric Kiwi. In March, he joined Supa, a company putting rooftop solar and batteries into communities to provide them with affordable electricity and revenue from selling surplus power. This week, he was invited by Ara Ake to talk about innovation and regional approaches at an energy affordability conference in Wellington. Referring to the impact of last winter's dry period and gas shortage, he says seeing "energy prices going through the roof and reliability tipping over" made him rethink what he was doing. "I thought, 'actually, our company makes more money by not selling energy to customers, but by selling hedges back to the market. That's not my game. I'm here to grow businesses and sell energy and make peoples' lives better'." Blincoe says the sector is at a once-in-a-generation tipping point, where the potential of distributed assets is now outstripping the potential of the grid. Trying to fix the country's energy problem with a centralised solution with the same organisations that caused the problems isn't going to work. "I certainly don't think that group of entities can solve this on their own, and distributed assets have to do a big chunk of the heavy lifting to get us there."
Market
But leaving it to the market is not going to work either, he says, because those who can't afford to go solar will get left with the mounting costs of maintaining the networks. "Customers are seeking alternative models, and the consumers who've got the wherewithal to invest in rooftop solar and battery will mitigate their own risks, and that's exactly what a rational consumer should do. It's economically the best choice for them," he says.
"However, even with that happening, I believe grid costs will go up regardless. It's an engineering-centric industry. "Engineers need certainty, and they won't trust consumers to deliver or decentralised assets to deliver. So they'll keep investing in assets, which are going to be built regardless of whether we need them or not. "But the key thing is that those costs have to be recovered."
Blincoe says Supa Energy's business model, in which it installs solar panels and battery systems at schools, marae, sports clubs and other community facilities, is one option. The arrays generate twice as much electricity as the community needs. Supa buys all the power and sells back - at a discounted rate - what the community needs. The rest is sold into the grid, with the community getting part of the income.
Arbitrage
"Fundamentally, what our technology does is take price volatility - the difference between the overnight low price and the evening peak price - and turn it into a revenue opportunity for communities. So arbitraging - buying cheap, selling high - one of those old business imperatives. That's what we do." Supa currently has 45 host sites, of which 40 per cent are schools, 40 per cent are businesses, 10 per cent are sports clubs and 10 per cent are marae. They could return $2 million to communities in the firm's first year of operation. Blincoe says the potential for Supa's business model and technology is large. "There are 2500 schools in New Zealand. There are about 3000 marae and 40,000 businesses. And they've all got roofs." Supa is also looking at moving offshore, using its artificial intelligence system to control battery storage systems. Underlying the business is the concept of delivering social and environmental benefits by "chasing the cheapest energy we can deliver", because it will be renewable. "The people that need the most support with the energy transition are not the people who read our LinkedIn posts," he says. "They're not the people who are in the Koru lounge this morning. It's out there in communities."
This article was first published in Energy News on October 10. It is republished with their permission. For a free trial you can contact eduardo.zanata@freemanmedia.co.nz
