Why we launched Tempus in South Australia
We had a dream….
After making the difficult decision to close our UK electricity supply business, we made a checklist of what our dream electricity market would look like. We dreamt about a real market that would allow customers to unlock the value of being flexible.
Our dream market has the following features:
- A true wholesale market, with electricity prices that reflect the actual cost of electricity demand, and not the cost of supply
- Forward thinking, customer focused utilities to give us a route to the wholesale market
- Engaged customers that want to reduce their own costs and be active participants in the clean energy transition
- A political and business environment that supports innovation & clean electricity
Australia has made our dream come true.
Tempus is unlocking the value of electricity demand. Our technology enables price responsive flexibility. By operating in markets where the wholesale market price is reflective of the true cost of electricity, the value of flexibility can be unlocked using exactly the same mechanism by which customers are charged for using electricity.
The wholesale market allows flexible demand to compete on an even footing with generation. There is no need for contracts and no need for the system operator to set aside the correct amount of money. The market and customers determines the correct price for being flexible. When market prices are high, flexible customers can reduce demand, avoiding the need for more expensive and dirty generation. This leads to lower prices for customers and cleaner electricity for the planet.
A larger market with more participants becomes a more efficient market. More competition also means less opportunity for individual participants to gain power and distort the market.
To understand why this simple sounding approach is actually quite innovative, we need to reflect on the traditional approach. Historically demand side response programs have existed in parallel with the wholesale market, with contracts between the system operator and flexible demand. Instead of money flowing through the wholesale market, the system operator sets aside a set amount to be used in auctions for flexible capacity.
There are a number of problems with the historical approach
- Minimum sizes that lock out smaller customers
- Limiting the total amount of money available for demand size response
- The value of being flexible is disconnected from the contract payment
- Influence of incumbents on regulator / the system operator
Price responsive flexible demand avoids these issues. It’s why we’ve been working so hard on technology that optimise the dispatch of flexible customers.
Forward thinking utilities and customers
Given how excellent the Australian market is for our technology, we needed to find a route to market. We are extremely proud to have developed a relationship with Origin Energy - a forward thinking and customer focused electricity retailer.
Origin understand that the clean energy transition is disrupting their traditional business model, and they want to be at the forefront of the new wave of innovation that is powering the transition. By working with technology startups like Tempus, Origin can continue to deliver the best possible service to their customers.
Origin's Executive General Manager, Future Energy, Tony Lucas, said:
“Demand-side management is one of the technologies we believe could be part of the future energy mix that helps to maintain affordability and security of energy for our customers. We’re excited to get our trial with Tempus Energy underway in South Australia so we can better understand the benefits and the customer proposition.”
Political & business environment that supports innovation in electricity
We met the South Australian government in Paris during COP21 and started to learn about the opportunities in South Australia. The combination of Australian energy market structure, high uptake of renewable generation in the state and SA government's commitment to drive decarbonisation through innovation and job growth were key points in our decision to set up in South Australia.
We were delighted to welcome The Honourable Tom Koutsantonis MP, Treasurer of South Australia to speak at our launch event in Adelaide, where he commented:
“That’s exactly the innovation we want in this country. This isn’t an experiment, this isn’t a laboratory where we are testing these technologies, this is a new world, this is the front line.
Every financial decision should have this in mind, that’s why companies like Tempus are at exactly the place, at exactly the right time, in exactly the right economy”
Australians have a positive attitude towards renewables, with around 1 in 7 homes already having solar panels installed; and we are not the only innovation company excited about Australia. For many innovative energy companies, Australia makes a lot of sense. There is a reason Tesla chose to build their 100MW battery and to develop a 250MW virtual power plant in South Australia. Wepower, a Blockchain based start-up aimed at providing financing for renewables, is also focusing on Australia due to engaged partners and ideal market conditions.
Our mission of decarbonising the energy system is still the same as it has always been; we believe that demand flexibility is the fastest route to this outcome and Australia the best place to accomplish our goal. We go in to 2018 excited for the energy future our new partnerships are helping us create.