Imagine how it would be, if you had to register with a local grocery store near you and buy stuff only from that store. And though that grocery store is not bad, there are perks other stores are offering that you would have liked to enjoy. For example, your friend’s registered grocery store takes back bottles and cans. This feels like a highly restrictive, extreme scenario that’s not possible.
And although this doesn’t happen with grocery stores, it does happen with your electricity providers. Normally, someone living in a particular location is able to sign a contract with only one electricity company, and will not be able to enjoy the benefits and flexibility of another company, just as going to another store to buy discounted fruits.
With that in mind, several utility companies and governing authorities are launching pilot projects where customers can have a connection with more than one power provider, known as Multiple Trading Relationships (MTR). Let’s discuss this in a bit more detail.
What are Multiple Trading Relationships?
As the name suggests, MTR allows customers to have a “trading” possibility with more than one utility company. This offers more choice and more flexibility to the customers. There are several cases where MTR makes a solid case. Let’s take a look at a few.
The Need for Multiple Trading Relationships
Let’s take an example. There is a homeowner named Laura. Laura is in contract with a utility company named X, and also has a large piece of land where she has decided to install a large, 50 kW solar power plant. The plant will generate 200 kWh every day, and Laura needs only about 50 kWh, what happens to the remaining 150 kWh of energy? It would have been great if the power company bought that energy and paid Laura for that, but it doesn’t.
However, Laura’s friend is registered with another utility company, which is in need of more power and has just started offering money to customers who can pump back their excess solar power. In this scenario, if Laura can register with the new company too, it will bring her much-needed flexibility. This is just one example, and there can be multiple reasons for customers to be connected to multiple companies. Here’s an excellent video by Ara Ake explaining the need and working of MTR:
Benefits of Multiple Trading Relationships
Here is a list of the several benefits MTR can bring to utility customers:
More choice and control
Like any other group of entities/providers, different energy companies have different pros and cons. Having the choice of contracting with any one company/multiple companies of your choice, gives you remarkable control over how you use your electricity - from selling excess power to having your energy better managed.
When it is binding for a customer to sign up and use just the one power company operating in their area, there is not much incentive for the company to offer better services and reliability. There are plenty of examples of how utility companies are operating in the same rigid, orthodox ways for decades. MTR changes this - if utility companies are not on their toes to provide top-notch service, customers may choose other companies.
In line with the previous point, competition leads to innovation. The companies offering the latest, modern features are better able to stay in the market.
MTR in New Zealand: The Beginning
A couple of years ago, New Zealand’s recently launched Future Energy Centre ‘Ara Ake’ launched a world-first pilot program to test out how MTR would work in the country. It is currently a voluntary program where customers or providers can sign up as volunteer participants.
As a customer, you can sign up with the following utility companies:
- Our Energy
Recently, a family named Wilson located on the Central Hawke’s Bay installed a solar power plant on their farm, and Ara Ake is running an MTR pilot with the family by connecting them to Our Energy. The plant consists of an 8 kW array and a 50 kW array. The family uses part of the power for their farm’s irrigation system, and sends the rest back into the grid. Here, MTR allows the Wilsons to share the excess power wherever they want.
According to Dr. Christiano Marantes, chief of Ara Ake, “Achieving our goals for a low emissions future won't be possible unless customers are put at the centre of this transition. MTR is the type of energy innovation which does exactly that - it's the Uber or Netflix of the electricity world." On the other hand, John Campbell of Our Energy was quoted saying, “it's great to get a real-world demonstration underway.” Campbell also hopes this is the beginning of a more accessible local and community energy trading model.
The Wilsons’ MTR arrangement is just the beginning of MTR pilots in the country, and Ara Ake has multiple case studies of similar nature planned. All-in-all, the future of energy and customer-provider relationships in New Zealand certainly looks exciting!