You open the familiarly branded envelope and uneasily extract the notice. You already know it will be bad news: It is a power bill.
You look at the amount, and feel a knot in your throat. Immediately you think of some scheduled purchases that you had planned for this month, and that you may now have to tell your partner that perhaps those must wait another month…
For some this may already sound familiar. For some it may become a familiar scene when the predicted 20% increase in electricity prices becomes real in a few months!
Rising electricity prices are a blessing in disguise. They cause three important things to happen, three forces that are fatal for the power retailers.
1. They raise the error margin for disruptive innovators. In simple terms they will not have to try so hard to be competitive. They can afford to be more expensive than even the current alternative, and still be in the race. This exponentially increases the chances of a disruptive innovation (or several) entering the market. Marginal ideas suddenly become commercially viable.
2. They create a massive pool of customers for these innovations and new products. Some people will simply not be able to afford to buy from the conventional suppliers, some will simply look for better options because those have become available.
3. The power retailers will be unable to respond fast enough. The higher prices will invariably be linked with quarterly and annual profitability obligations. Those figures will be eroded simultaneously by both the loss of market-share and by the probable need to lower prices.
What will these disruptive ideas look like? What happens to the grid? The imagination is the limit, and over the next few blogs I will explore some of these ideas.
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