Paolo Bevilacqua, President and CEO of Real Utilities, explains how their “business model” helps them achieve the triple bottom line by delivering sustainability, economics and customer benefits.
Amid rising oil prices around the world and Australia’s energy crisis that is seeing cost and supply spikes, this Australian company is using a unique energy retail model to provide cheaper electricity and greener to homes, retail and industries.
In the space of just five years, Real Utilities has grown from two operating sites to 16 and has expanded its portfolio from purely residential developments to commercial and industrial projects. While the company sells 100% carbon neutral power to all of its retail sites, two of its industrial sites use a combination of solar PV, battery storage and diesel generation technologies. Serving only Frasers developments such as Ed.Square in Sydney and Burwood Brickworks in Melbourne, Real Utilities compares its gas and electricity rates to those of major energy retailers to ensure cheaper rates.
Impact of rising energy costs
Describing the dramatic increase in energy prices as extraordinary, Bevilacqua says they remain committed to providing energy at prices cheaper than large retailers. By increasing distributed generation at their sites using solar PV panels and using more commercially viable batteries, they can purchase less from the grid, allowing them to easily manage the load.
Bevilacqua believes Australia’s current energy crisis is the result of an unplanned transition from fossil fuel-based technology to renewables. The lack of a really good plan for how all that distributed power gets integrated into the system and into the national electricity market has hampered a smooth transition, he says.
Knowledge of the customer
Under the Energy Act, customers can go to any energy retailer they choose – a decision usually based on their perception of a better deal. “We spend time with the customer to explain that our offer is better. Energy retailers have made it very difficult by having many plans and pricing structures and so called deals that people don’t even know what they are getting and whether or not they are getting the best deal” , says Bevilacqua. Real Utilities simplifies energy by making it cheaper and greener, and simple with one plan.
At Real Utilities residential sites, the company uses the Net Promoter Score (NPS) to measure customer satisfaction, which is +31; the industry benchmark for energy retail is -9.
So, if residents are happy and customer satisfaction is high, why does Real Utilities limit its services only to Frasers properties?
As an organisation, Frasers Australia is still fundamentally a real estate company, says Bevilacqua. “We build communities and our biggest goal is to create communities where people have a sense of belonging. It’s really something that we focus on in everything we do, and we see that customer service through energy that removes all the noise is something people need.
Given the large-scale development going on in Australia, why aren’t developers setting up community energy hubs in their housing estates? While cost is a factor, Bevilacqua says the biggest hurdle is energy regulations.
“It’s really important to make sure that the people authorized to supply energy have the financial capacity and can provide the right protections to customers. The amount of things we’ve had to put in place to better provide an energy retail service is extraordinary,” he explains.
“It’s very broad what energy retailers have to supply because apart from the roof over your head, the second most important thing is the energy flowing through the house. I think that was an obstacle. If you are a real estate company, do you want to assume these risks? asks Bevilacqua.
What does the future look like for Real Utilities?
By the end of 2025, the business will not only be 100% carbon neutral, but also powered by 100% renewable energy produced in Australia (planned by January 2024). The number of customers is also expected to increase by two and a half times.
As they increase the amount of solar power and the size of batteries, Real Utilities is looking to provide services to the grid as the grid increasingly transitions to more renewables.
The triple bottom line
Frasers Sustainable Buildings are designed to reduce energy consumption, while Real Utilities was created to sell energy. Isn’t there a little tension?
Bevilacqua explains that if the energy service is contracted out to a company operating private energy networks, its main motivation would be to earn money by selling energy.
“But our main motivation for having a retailer within Frasers is the kind of intellectual property that we gain by being able to operate the buildings and sell energy there. It’s good that after that , the company is also commercially viable.
“To me, that’s kind of the holy grail of a sustainability offering, if you can actually deliver the benefit of sustainability and also deliver a good economic benefit to the business. Then the customer also benefits. We’re probably barely reaching the threshold where it’s a viable business. So we can see that the triple bottom line is being realized.
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Real Utilities is a licensed carbon neutral energy retail business established in 2017 and wholly owned by Frasers Property Australia.