- Residential Energy Innovations
- Energy as a Service
- Energy Service Subscription Pricing
In the Power Sector, sonnen Is Embracing the Service Model
Much has been said about younger consumers shifting consumption habits from an ownership model to one in which products are received through subscriptions (as a service). The classic examples are the video and music industries, in which CDs, DVDs, and even digital files have fallen out of grace, replaced by services like Netflix and Spotify. In the power sector, many companies talk about offering services as the future, but few have embraced this trend. sonnen is an exception.
A Transformation in Business Model for sonnen
Based in Wilpoldsried, Germany, sonnen was founded in 2010 as an OEM for residential battery storage systems. While sonnen still sells batteries, its business model has transformed completely from cash sales of its systems to that of services. Today, sonnen is also active as an energy supplier, providing a variety of energy services centered around its community of customers, which are about 50,000 owners of sonnen’s storage solutions. The company has about 450 employees working across several locations in Germany, Italy, the UK, Australia, and the US. After an initial investment by Shell Ventures in May 2018, Shell acquired sonnen in February 2019. With its latest products, sonnen continues its transformation as a full-blown energy (and more) provider. On November 7, the company launched two new products, sonnenNow and sonnenDrive.
With sonnenNow, customers rent a PV system and a solar battery for a monthly amount instead of buying them. The monthly amount includes any additional electricity not directly produced by the system. The price is set is at the same level as the previous electricity bill (i.e., costs that would have accrued to the household anyway). This is possible because sonnen also uses the energy storage system for its virtual power plant and can generate revenue in the energy markets for its customers. The electricity demand that is not covered by the system comes from the sonnenCommunity, enabling 100% clean electricity.
The sonnenDrive offering is more innovative. It allows customers to rent a brand-new EV with no long-term commitments (the minimum period is 6 months). What sets sonnenDrive apart from traditional leasing contracts is that insurance, maintenance, and tires are included in the subscription. The EV is also anticipated to be part of any sonnen contract (sonnenFlat or sonnenNow), so it can be charged at home for free. These EVs are planned to be added to sonnen’s VPP, recovering some of the costs through grid services.
Consolidating the Residential Energy as a Service Market
Consolidating the residential energy as a service market is expected to take time, but sonnen’s experience transforming from a battery OEM to a service company shows that it is in an attractive and feasible market and it is ready to expand. The subscription models allow sonnen and its customers to extract the most value from customer-sited assets. The company is taking the next step into this space by capturing a large source of energy demand of bundling EV rentals and solar roofs with its existing services. It is early to know if the residential energy as a service market is ready to go mainstream, but sonnen is indicating that, at least, it exists as a niche.