A smart, entrepreneurial Germany battery company is taking on its country’s electric utilities as it carves out a new business model for itself amid a fast-changing energy marketplace.
Sonnen, based in Bavaria, aims to bring its disruptive vision of the future of electric power to America in a few years.
Just two weeks ago, it started providing an unprecedented blend of energy storage, energy management capabilities along with free electricity to 2,000 customers across Germany, from Hamburg to Munich, Christoph Ostermann, co-founder and CEO of Sonnen, Thursday told the Energy Times in an exclusive interview.
Ostermann will be a featured keynoter at the Times’ Empowering Customers & Cities executive energy summit in Chicago November 1-2 which will focus on the future business of electric power and utilities in America and around the world.
Sonnen provides batteries to customers with installed solar and renewable energy generation that, together, provides about 65 to 70 percent of their electric power needs.
“The remaining power which a customer needs to buy from the grid he gets from us for free, so he is not paying money anymore to his utility,” Ostermann said.
Sonnen generates a revenue stream of 450 Euros or about $502 a year per customer in demand response markets, in effect elegantly curbing their energy use when demand and prices are highest.
In exchange, the customers get to totally sever their ties to the local utility.
“We just give them the power for free,” Ostermann said.
Noted business thinker Jeremy Rifkin has said that massive disruptive threats are dead ahead for multi-billion dollar electric utilities that have been around for a century.
Some utilities will fail, Rifken predicted.
“It is a third Industrial Revolution based on a platform that is distributed, open, collaborative, transparent, and laterally-scaled,” Rifkin told the Energy Times in an exclusive interview. “It is a disruptive revolution that is going to require quite a bit of expertise for companies to engage.”
Rifkin will be joining Ostermann as a featured keynoter at Empowering Customers & Cities.
Navigating disruption is in the DNA of Sonnen, which was recently named by MIT as one of the “Top 50 Smartest Companies” on the planet.
Sonnen has about 15,000 energy storage systems deployed in European residences, with about 90 percent in Germany.
“This is the critical mass we need in order to be able to attend the demand response markets and it is also where energy services start slowly to make sense,” Ostermann said.
Sonnen’s strategic vision is that the product it will sell customers will be much more than a plain vanilla battery.
“It is also an energy manager,” Ostermann said. “With our system, we can also manage here in Europe the heating system of the house. In the United States, it would also manage air conditioning. We manage a couple of devices in the house in order to save money for the customer and in order to optimize both energy production and energy conservation.”
The company is establishing a beachhead in the United States, where it is partnering with solar equipment manufacturers Sungevity and SolarWorld.
Sonnen has already shipped about 500 storage units to America.
“This is by far not enough but we can start interesting service and utility business models like this,” Ostermann said. “We need another few years to better understand the regulatory framework and to deploy a meaningful model of systems.”
Understanding and responding to the diverse regulatory regimes in American states will be paramount.
“This will at least take another year or two,” he said. “The hard thing about energy markets is that energy markets are highly regulated, and every market looks a bit different.”
For starters, he said, the relatively free-wheeling Texas market has an appeal to Sonnen comparable to Germany, the United Kingdom and several other European markets.