Mojo Power has a new retail model for a new energy landscape. Co-founder and chief financial officer Darren Miller discusses disrupting the domestic energy market and putting the customer first.
Mojo Power is the electricity retailer that wants customers to use less energy, and its eyes are firmly set on disrupting the domestic market.
In a country where end-users have become deeply cynical about their energy providers and ‘bill shock’ has its own hashtag, it should come as no surprise an unorthodox startup has been welcomed with open arms.
Mojo’s unprecedented billing model decouples customer energy consumption levels and profits, leading to a no markup approach to electricity sales. Instead of charging per kilowatt, Mojo sells electricity at cost and profits from subscription fees.
It is early days for the brand. Nonetheless, energy comparison websites are already praising the model and it seems to be only a matter of time until Mojo becomes a strong second-tier retail competitor along the East Coast.
The idea was conceived after an energy executive and a finance specialist crossed paths at Sungevity, a US solar electricity company. The pair – ex Australian Power and Gas (APG) head James Myatt and former Publishing and Broadcasting Limited investment analyst Darren Miller – tackled the challenges of Australia’s new energy future from all angles. After locking themselves away for several months, James and Darren emerged with Mojo Power in late 2015, and haven’t looked back since.
Foreseeing the effect solar, battery and storage technology is going to put on energy businesses throughout next decade, Darren says retail is the space to be in.
“Retailers hold the key relationship with consumers, and it’s consumers who are going to give rocket fuel to the evolution of the energy landscape,” he says.
While the rest of the energy sector faces huge challenges in dealing with declining grid consumption, Mojo is essentially looking at a risk-free future. Darren and James aren’t afraid of solar, batteries and electronic vehicles entering the market; in fact, their success depends on it.
“We set up Mojo because of this changing environment. Without disruptions to the market it would be business as usual, and we wouldn’t have a business case. But now people are looking for a change, and for a solution to a growing problem: the increasing cost of electricity,” Darren says.
“People are looking around and asking, ‘who do I trust and where do I go?’ and we’re positioning Mojo as the answer.”
For a fixed monthly fee, customers are given access to hedged wholesale power prices, which undercut rival retailers’ standing tariffs by up to 30 per cent. It’s “the Costco of power” as backer, Former Foxtel executive Kim Williams, said.
Mojo offers three EnergyPass options: The Basic EnergyPass package ($30 per month) allows customers to access to electricity usage data from up to 48 hours ago; the Plus+ EnergyPass ($40 per month) gives customer access to live energy usage information; and the Premium EnergyPass ($50 per month) offers the above features, as well as unlimited phone support in business hours. Signing up to the Plus+ or Premium packages also comes with a smart meter upgrade.
Originally, Darren thought the model would only make financial sense for the top 30-40 per cent of households – families in the suburbs with a swimming pool and air-conditioning. But feedback so far reveals the rest of the market is interested as well.
“We started off thinking our model would be a bit niche, but we’re receiving really positive feedback from customers in apartments and people with below-average consumption who don’t like the uncertainty associated with a volatile market,” Darren says, acknowledging media coverage of rising electricity prices is good for business.
“It takes a few minutes to explain the premise of the business, because most people haven’t ever thought about energy in this way before. But when they understand it, it’s like a light bulb going off – pardon the pun.”
Indeed, from a retail perspective, the energy industry hasn’t had a lot of innovation in a long time. With more markets deregulated than ever before, the opportunity is there. But as Darren says, the entrenched retail models of the big three incumbent retailers don’t lend themselves to radical changes.
“Any innovation in the market is going to come from start-ups: companies like us that approach the industry with an entirely new perspective,” he says.
“The old, government-type model, where prices are built into kilowatt usage, with incentives that can be given and taken away, is all very confusing for customers. We thought we could change this by opening up and becoming more transparent in the way bills are charged and how energy is used.”
Smart technology is a key aspect of Mojo’s business strategy. The company installs and is responsible for its high-tech own smart meters that allow customers to see their electricity usage in real time and respond accordingly, rather than waiting anxiously for a quarterly bill.
“The future of energy is data, analytics and software. To make the most of smart devices, and all the benefits solar and batteries offer, you need full-time access to the home,” Darren says.
“The smart meter is this gateway, allowing us to collect accurate and relevant data.”
The fact Mojo doesn’t discriminate against solar customers is interesting in its own right. For the most part, Australian electricity retailers are not the friends of solar-powered homes. In fact, solar homes are precluded from signing up to some retailers’ best discounts. But because it is in Mojo’s financial interests for customers to save money, the company actually encourages customers to switch to solar.
While Mojo doesn’t promise higher solar feed-in rates, the company does come onside with solar homeowners, giving them the insights and guidance they need to get the most out of the solar they generate. This could potentially help customers save more money in total than by upping their feed-in rate.
As Kim Williams told TheSydney Morning Herald, “it’s about being a partner with the consumer rather than just wanting consumers to chew up more and more power”. The former News Corp Australia boss is one of the high net worth individuals that have invested in Mojo, which also received $5 million from Southern Cross Renewable Energy Fund, backed by the Australian Renewable Energy Agency and Softbank China Venture Capital.
In a few years time, Darren hopes to have tens of thousands of customers across Queensland, Victoria and New South Wales as a minimum, with at least half of these owning Mojo smart meters.
“We’re looking at a future of solar, storage, demand response and energy efficiency, where our customers have the technology to reduce their energy bills to a level that is below what any other retailer can provide,” he says.
With 20 per cent of Australian households installing solar panels on their roofs, a business that thrives on the uptake of disruptive technologies certainly seems poised for success. For now, at least, it seems playing fair is one way to get noticed.