Origin turns to gaming to fend off disruption

Tapping the computer gaming culture is just one innovative avenue Origin Energy is pursuing as it goes on the front foot to tighten links with retail customers and avert the risk of disruptors derailing its strong position in the fast-changing energy market.

Chief executive Frank Calabria said an exclusive partnership with US start-up OhmConnect has evolved to the stage that will see the Californian outfit's platform that gamifies "demand response" for customers launched in Australia. The first customers are expected to be offered the product, which provides rewards for reducing energy use at home during peak demand, within weeks.

The tie-up with OhmConnect is among several Origin has formed with high-tech specialist players in areas it expects to be critical in the 21st-century energy market. Fast growth in distributed energy such as rooftop solar and home batteries defines the market evolution, along with the increasing importance of data analytics and artificial intelligence.

"That combination we believe will enable us to do more with products and services into the future and also changes the engagement that customers have with us," Mr Calabria told AFR Weekend.

"It really all sits ... with an objective that we create competitive advantage by making energy easier, cleaner and smarter over time for our customers."

Origin's $507 million investment in early May in British-based Octopus Energy – the self-styled aspiring Amazon of global energy retailing – is a key element of the strategy. It includes a deal to access the firm's Kraken online platform that will enable the smooth rollout of new products and technologies to Origin's 3.8 million retail electricity and gas customers, all at a lower cost.

"We see that as being a key platform by which we can take that journey into the future world," Mr Calabria said.

The investment in Octopus comes as Origin's own electricity customer accounts have been sliding, down by about 19,000 in the December 2019 half.

OhmConnect was one of the first opportunities Origin seized from the Free Electrons start-up accelerator program it co-founded in 2013, where 10 utilities from around the globe access the agility, fresh ideas and tech know-how of emerging energy innovators.

Fellow Australian AusNet Services is among the 10, as are EnergyAustralia's parent CLP Group, Japanese giant Tepco and majors from the US, Dubai and Germany.

Origin has probably examined more than 2000 opportunities through that program over the past three or four years, Mr Calabria said. But at the same time it has been developing its in-house capabilities in data and analytics to be able to connect and orchestrate the increasing number of distributed energy systems owned by its customers and make full use of the insights and data arising from them through artificial intelligence.

"If you believe in that future, as we do, you have to really understand those trends and build those capabilities," Mr Calabria said.

"What we recognised was the need for the orchestration of distributed assets and lower-cost solutions because with more renewables coming, your ability to be able to flexibly adapt and manage the cost of energy for people and create those new products and services was key."

Batteries for apartments

Origin set up an office in 2017 in Silicon Valley, where it is represented on the ground by Cameron Briggs, general manager of its future energy team, headed by Tony Lucas.

This year's version of the Free Electrons program gets under way virtually on June 1 with the final 15 start-ups, the COVID-19 pandemic having derailed plans for a Sydney-based program.

OhmConnect, which has half-a-million users in the US and Canada, paid out $3.2 million in rewards during the last northern summer, reducing power use by more than 387 megawatt-hours. Origin is hoping the gamified experience, which drives frequent participation by customers, will result in demand response gaining more traction in households.

Origin has made a small investment in another Free Electrons alumni, Orison, a US start-up that has developed a small, low-cost battery system that is easy to use for apartment dwellers and renters, or for households without rooftop solar.

Mr Calabria said that gives those customers the opportunity to participate in the storage revolution without the expense and technical complications of installing a typical household battery, while at the same time providing Origin the opportunity to manage batteries on its network to complement variable supply from renewables.

Origin has also quietly sunk $20 million into data security specialist Intertrust Technologies, alongside Germany's E.On, Sony and Philips. A five-year technology development partnership with the expert in digital rights management technology will focus on data governance and privacy.

A smaller investment of less than $3 million has gone into Cryptowerk, which uses blockchain to authenticate digital assets.

Pandemic opens customers' minds

Mr Calabria said Origin makes such investments with a strategic mindset, not as a passive investor to "sit on the side" and watch.

"They are all specifically partnerships and/or investments that we have made and also building our own capability that is all about a future founded on those beliefs," he said. "We’ve been doing that for a number of years and its good to see they are coming to fruition."

Catching Origin's eye in the 2020 batch of Free Electrons participants is home-grown Allume Energy, whose technology has the potential to open up the benefits of rooftop solar to apartment residents or to joint commercial tenants for the first time. Mr Calabria said Origin would work with Allume, one of two Australian start-ups in this year's program, in a trial of the behind-the-meter technology with customers that until now have been excluded from the solar boom.

Allume is also working with BlackRock-backed and ASX-listed junior Locality Planning Energy in a separate partnership announced this week in Australia.

Origin has found that the COVID-19 pandemic has only increased customers' receptiveness to try out new technologies and different ways of engaging, which Mr Calabria said presents an opportunity to extend the momentum of the future energy strategy.

"It is all about a strategy that puts you ahead in a rapidly changing energy landscape," he said.

"Disruption can come from many sources and many directions, but we have identified what we believe are the emerging trends, positioned ourselves early, have been building capabilities and investing.

"But you have to continue to work on that because disruption can come from anywhere."