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What Happens When Utilities Get Smart?

Erika Malzberg

Can you think of any industry more “legacy” than utilities? More old-school? More traditionally transactional? Less focused on the customer experience?

Take, for example, the customer experience of moving into a large property, like a high-rise, office park, or shopping center. Whether it’s a renter moving into an apartment building or a commercial tenant setting up shop in an office complex, the process of hooking up the utilities is one of the most important tasks, but it is often fraught, with frustrating delays and billing confusion. And it’s not just the end consumers who suffer. It’s also a hassle for owners and developers of these large multi-tenant properties, who often bear the brunt of tenant complaints while trying to keep vacancies to a minimum.

What if there was a better way?

That’s the question that energy and utilities companies have seemingly started to ask themselves as the industry faces forces of disruption.

Demand is growing, but revenues are not. Consumers have different expectations across the board about services, access, and customer-centric solutions. There is increasing pressure from consumers — and governments — for cleaner energy. And the relentless advance of technologies like smart devices, cloud-based computing, and artificial intelligence (AI) is putting on the pressure to innovate. In response, utilities around the world are trying new strategies, like adopting new technologies, updating their distribution networks, and shifting to renewables like solar and wind.

And now, thanks to smart technology, there is an entirely new model: the embedded network model for utilities.

In this model, the owner or developer of property purchases utilities in bulk from a traditional provider, then resells to their tenants while managing the network. In effect, the owner becomes a mini utility company. Australian utility leader EnergyAustralia has pioneered this model with their subsidiary The Embedded Network Company (TENC). “We started off with energy only products, but now we’ve grown our product stack to include water, air conditioning, gas cooktops, and other services,” says Benjamin Parkes, Customer Operations Lead at TENC. To deliver all these services, TENC helps their customers set up the infrastructure, then helps them manage and optimize their systems over time as a subscription service.

TENC employs digital strategies like smart meters, demand response, and behind-the-meter technologies that give both owners and tenants more control over how their utilities are used.

Property owners and developers gain the ability to customize their utility network based on the specific needs of their particular property type, as well the ability to gain consistent revenue streams based on the provision of those services to their tenants. TENC also helps developers save on upfront costs. TENC technical experts consult with developers in the planning stage, rather than coming in at the end when the infrastructure has already been built. This avoids the need to retrofit. Embedded networks are also a win for tenants. Connecting and disconnecting is much easier than with traditional utility models, and TENC does not charge additional fees. And because the price of utilities bought in bulk are lower, tenants receive their utilities at below-market rates. Perhaps the most exciting innovation is that tenants receive all their utilities in one bill; no more having to keep track of electricity, gas, and water in separate accounts. With this model, as Parkes notes, “Tenants can manage all their utilities at once. It’s a smarter way to operate.” In other words, say goodbye to grandpa’s dumb utilities and hello to smart utilities.

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