Mojo Power is a new Australian energy retailer with a radically different business model. What’s distinctive about Mojo’s approach? Quite a lot, it turns out. Which is why we agree with Mojo that it could potentially shake up the Australian retail energy sector.
Decoupling consumption from profit
The most striking difference is how Mojo makes money from selling power. Instead of putting a mark-up on its kilowatt hour rate, Mojo derives its profits by charging a monthly subscription fee for an ‘EnergyPass’, which allows its customers to buy power at wholesale market rates. The company says its prices are around 30% lower than those of other retailers, and the rates are the same for all customers, whether they’re new or loyal.
Decoupling profit from energy demand not only helps customers save on their electricity bills. Mojo is also future-proofed against the growing impact on grid consumption of home generation and storage technologies, such as solar panels and Tesla batteries. Whether customers take 100% of their power or nothing from the grid, Mojo’s profits are unaffected – the same can’t be said for the traditional energy retail model.
The effect of home solar is set to become significant in Australia, where take-up is approaching critical mass. Nearly 15% of Australian households now have solar PV systems, and Tesla home batteries, which store power for later usage, are increasingly available. Mojo expects to capitalise on this trend by introducing its own domestic solar and battery packages from next year.
A choice of service levels
Another novel aspect of Mojo’s proposition is that customers get to choose the level of service they want to receive. Mojo offers three EnergyPass packages, ranging in cost from AUD35 to AUD55 per month. Access to wholesale rates for power is included in all the packages, but customers must select at least the mid-priced plan if they want to have a smart meter installed, while phone support is only available with the most expensive package.
Instead of investing heavily in an inbound call centre, Mojo has developed a range of self-service tools that encourage customers to be more self-sufficient. There is live interaction via the web, and Mojo says that satisfaction levels with web chat are high. Customers can also request a call-back via the web if they do need to speak to an agent. There’s also a community forum, which helps customers find answers to their queries.
Smart meters and energy dashboard
While Mojo’s customers do not have to choose a smart meter, there are various benefits for those that do. For a start, they receive accurate monthly bills that are based on actual meter readings rather than estimates. In addition, Mojo provides an energy dashboard with analytics to help customers better understand their usage and save energy. The dashboard tool can also predict the customer’s end-of-month bill. As a result, Mojo says it receives virtually no billing enquires.
Usage profiling based on smart meter readings will also feed into Mojo’s plans to offer solar PV and battery storage systems, as the data can inform the type and size of system that’s most appropriate for the customer.
Mojo’s subscription model most benefits households with above-average electricity consumption, such as those with air-conditioning or swimming pools, who stand to make the biggest savings by switching to Mojo. This target market is also a good fit for the solar and battery systems that Mojo plans to sell in future. But with customer switching rates in Mojo’s operating territories (currently New South Wales and Queensland) languishing in the low single digits, how quickly can Mojo realistically gain market share?