Energy Marketing: Is There Added Value in Value Added?

Fortnightly Magazine - September 15 1997
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In Norway and in England and Wales, power retailers are learning hard lessons.

The U.S. electric industry has long tried to follow Thomas Edison's dictum "to sell light instead of current" (em to get beyond the meter. But what is beyond the meter at industrial and commercial sites?

In energy-intensive industries one sees processes such as smelters, pulp mills, rolling mills, refineries and chemical plants. In general manufacturing, although some electricity is used for specialized electrotechnologies, most is used for lighting, motive power, computing and robotics. On commercial premises, electricity is mainly used for lighting, air conditioning, refrigeration and computing.

What is beyond the meter is diverse and characterized by a wide range of technologies and products. These products are manufactured and marketed in different ways with different skills, many of which are a far cry from the technical and commercial skills available in the electricity supply industry. Electricity industries in the U.S. and Europe have spent a lot of money trying to go beyond the meter. Based on the diversity of what is out there, it is not surprising that they have not established a significant foothold.

More recently, gas marketers have suggested that by analogy with their activities in the gas wholesale market, they can add value in the electricity market by services such as aggregation, fuel management services, asset optimization, reliability through diversity and risk-management services. But in reality, most of these services (with the notable exception of risk management) are for the wholesale market, rather than the general retail market. Furthermore, some only exist because of inefficiencies in the gas wholesale market.

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