Retail 2.0 Stage 3: Expand by Creating a Community-Driven Local Energy Market
In my post about Stage 1, you learned of the importance of recruiting at least one anchor tenant. Then, in my post about Stage 2, you discovered how to expand your reach and tap into the benefits of self-aggregation. Stage 3 allows you to take it all to the next level by creating a community-driven local energy market. It ensures that you expand even further than you did in Stage 2 to ensure that the full community has access to affordable, reliable, and local energy.
This stage is not for the weak of heart. You are going to have to work hard and stay focused to accomplish your goals. You may even have to do some sweet-talking with the corporations you signed in Stages 1 and 2. Why? You don't just need them on board — you need access to their employees, too. After all, community means everyone, not just a select few.
What Is a CCA?
A CCA is also known as Community Choice Aggregation. It is considered one of the most economically efficient energy models when looking to deploy a full community energy market.
The way that a CCA works is that local entities aggregate their buying power from individual customers within a specific jurisdiction as a way to secure alternative energy supply contracts. This is in comparison to a traditional, investor-owned utility energy supply system.
There are both pros and cons of CCA to understand.
Pros of a CCA
- Environmental benefits: CCAs allow more freedom to choose how the electricity is generated from renewables.
- Jobs are created due to a demand for renewable energy, thus creating opportunities within wind, solar, and hydro facilities.
- Energy becomes decentralized, providing local control over electricity.
Cons of a CCA
- CCAs aren't readily available throughout the country yet.
- Energy may be clean and green, but it isn't necessarily local. Why? Because renewable energy certificates are being generated from facilities elsewhere in the country.
- Fossil fuels may be used because the local government is still deciding who and where power can be procured from.
While a CCA is economically efficient, it isn't always the greenest alternative. If there is a deregulated electricity market, there are better opportunities for you to explore – and this is when you can benefit from the Retail 2.0.
A lot of it comes down to what's available. Is your area still being controlled by the government, or is there deregulation in place?
Recruit Employees (or Customers)
The alternative to creating a CCA is to recruit the employees or customers of those you worked with in Stage 2. Recruiting Walmart's customers, for example, would be a way to ensure that there are additional benefits and customers to serve once you have created a grid. You can also complete the plan with local energy.
Recruiting employees is critical to the market to ensure that there are enough people willing to participate. It is what allows the model to work – otherwise, the energy is only being distributed to the large corporations. While still viable, it is not a community project.
You need to make sure everyone is on board. You can choose to recruit employees, or you can recruit customers. Either way, depending on who you're working with, you need everyone to take advantage of the decentralized solution that you're offering.
Recruiting for your local energy market has to take the approach of any other recruitment. Why you? What do you have to offer? People are not going to come over to you just because you ask. You have to entice them. It is as if you're trying to recruit the star quarterback to your team.
Tell them what you have to offer:
- Competitive rates
- Local energy
- Clean, renewable energy
Deliver a Community-Driven Local Energy Market, Not Just Energy
You also have to shine where other models have failed. You have to deliver on customer service. Make it about them. By taking a customer-centric approach, you cater to the people instead of making it all about the money.
Show the employees or the customers that you are capable of being the cutting-edge solution they've been searching for. Explain your innovative solution and the clean power projects you have going on. Talk about why they need to decentralize and why you're the one to get the job done.
Recruiting involves you knowing all about your market, inside and out. Market yourself. Promote yourself. Spell out the benefits of a decentralized energy market and what they can expect to gain by getting their energy from you. Once you have them hooked, you can complete Stage 3. You can have yourself a community-driven local energy market because everyone, now, has a vested interest in its success.
Help the Corporations by Creating Company Benefits Packages
The corporations that you initially recruited in Stage 1 want as many benefits as possible. While affordable and clean energy is important, they also want to help their employees. This is when your community-driven local energy market can work with them to create company benefits packages.
These benefits packages will allow employees to upgrade to smart homes. The packages can include a number of upgrades, such as:
- Renewable Energy
- Energy Efficiency
- Flexible Loads
- EV Charging
- Energy Storage
These various upgrades can be incentivized by the company. Additionally, employees will be able to utilize PACE finance where it is offered.
What this means is that any employee can choose to take advantage of the program. You can combat any objection they have. It's clean, it's renewable, and it's affordable. For those who need extra convincing, you explore the PACE financing. Show them how others have benefited. Compare electric bills from within your Retail Business Model 2.0 versus those who are still connected to the centralized energy providers that the government has chosen.
Helping the corporations works to your benefit. You keep the corporations happy. Additionally, the packages will be used toward recruitment.
Solve Corporate Problems
Remember, one of the reasons why Retail 2.0 can be successful is the focus on making it customer-centric. If you don't cater to customers, you will fail like all of the previous models. As such, you have to address the problems that corporations are having.
Problem 1: Turnover
Corporations experience a significant amount of turnover, whether it's with their employees or their customers. By introducing them to this retail business model, you can help corporations strengthen their relationship with employees and/or customers. These corporations also become desirable to the emerging millennial workforce. Today's workforce values technologies, their employer's reputation, and the aspects that impact the climate. Community-driven local energy markets will be right on point.
When corporations can provide clean and local energy while also incentivizing company benefits packages that allow for smarter homes, employees and/or customers are more likely to stay with the corporation for extended periods. This will start to eliminate the turnover that was previously experienced.
Problem 2: The Promise of Renewable Power
Corporations struggle with the ability to achieve 24/7 renewable power. With this new model, there is flexibility provided by the employee sites. These will be procured to provide the anchor tenant with the means to obtain renewable power through community distributed assets. It ensures that they are able to be more environmentally friendly while also meeting any city and state requirements as it pertains to renewable energy.
While not a problem, the benefits packages will also be offered by the local business community to the rest of the market. LO3 offers a configurable marketplace that would make this possible. The platform can account for and transact the costs and benefits throughout the supply chain.
Corporations already know about the problems. They just don't know how to address them on their own. This is when you can highlight the problem and come riding in on your white horse to show them the solutions a community-driven local energy market can offer. As they understand the model that you're offering them access to, they can see how their problems will be solved. You just have to approach them with enough gusto that they're confident that you're the energy retailer that will get the job done.
Assess the Market
When you're preparing to roll out the Retail 2.0 Stage 3, there are various segments that could benefit. You must conduct full market assessments to identify where decentralized energy can be utilized. Additionally, it's important to find a local grid that will support your plans while allowing you to grow exponentially over time.
Some options include:
- Large tech compounds such as Amazon, Google, Facebook, and Microsoft
- MUSH (municipal, university, schools, hospitals)
- Community solar developers
- Utilities/retailers looking to target large commercial and industrial clients
Once the research is done, it will allow you to move forward with your plan. Further, the research shows you where you can accomplish your goals. The more data you find, the easier it is for you to overcome the obstacles of previous developers and platforms.
There are also various reasons as to why investors should be seeking Retail 2.0 opportunities. The many benefits will be covered within my next blog next week.