Columnists: Hans Nilsson, Fourfact

Published on: 26 Mar 2015

Hello Edison – the European Energy Union may save your original business model!

It is said that Thomas Edison’s original business model when he had invented the light bulb was to sell light, not electricity. The story has it that he was talked out of that by his business partner, J.P. Morgan, who preferred to sell kilowatt-hours since they were easier to meter than light-hours. So there is where we originally divided energy from the service that energy provides.

There is a lot of learn from that story. One thing is that when bankers get involved in business they may turn weird, but we have to leave that part until another day.

Consider this. What could have happened if Edison would have had his way. Would that not have created an incentive to improve light bulbs to use less energy and provide more service (light) much earlier, since the Edison era incandescent light bulb hardly changed over many decades? The answer is anybody’s guess but it certainly seems a reasonable opportunity.

Now we face a new opportunity when the Energy Union pronounces that the ambition is to “ fundamentally rethinking energy efficiency and treating it as an energy source in its own right so that it can compete on equal terms with generation capacity” . “Energy Efficiency first” – they say. That could certainly be a game changer of the sort that Edison may not have dared to dream about, but is does not come out of the hat just because we want it or say it.

However the time is ripe to do it since technologies have developed and continues to develop in three main aspects:

  1. ICT is integrated throughout the energy system – from generation to transmission, distribution and demand. We are able to design control in operations and make demand and supply follow each other almost as we please.
  2. Smart equipment get smarter by the day and in particular gives us far better ways of using electricity with higher efficiency than burning fuels for transportation.
  3. Energy supply gets miniaturised and allows us to make use of renewable fuels where they are but also smarter use of fossil resources in local production.

All this opens for what the Energy Union calls a “participatory system”. And it opens for a revival of Edison’s idea to focus on the service that energy provides rather than energy itself. We must, however, see energy and the equipment as ONE unit – a service-providing unit  – and find ways to make business over-the-counter with such.

Sooner or later there will be some entrepreneur coming up with the IKEA-idea – ust as they are packaging the furniture in a flat box and shipping it with a tool that enables the fitting to be done at home someone will come up with e.g. a refrigerator sold with electricity included over its life-time.

Sometime in the future we will be telling our kids that in the old days we listened to music from 78 rpm records on a gramophone and not downloaded from the web, we telephoned through a wired switchboard and not on mobile phones, we bought equipment and electricity separately! And the kids will say “C’mon granny! I believe the two first but not the third. That’s too weird”

This development is actually in the European Energy Union idea. It’s a bit hidden but it is there. It will, however ,need to be transferred into guiding directives that changes the market rules and let loose the powers of the market to realise these opportunities.

Such will require changes to existing policies (e.g. a rewriting of EED article 7 that removes the inertia of existing power companies.) Some of those companies will undoubtedly complain, but several leading ones have already embarked upon this process.

And I call to all politicians in Europe – please help these avant-garde companies! Edison will smile in his heaven!


Other columns by Hans Nilsson