Start-up and market newcomer Mojo Power, has entered the Aussie market, pioneering a ground-breaking business model.
It will empower consumers to reduce their power usage and potentially use more renewable energy. Existing electricity retailers (including the big three) make more money the more electricity their customers consume. Mojo Power doesn’t do this, instead it offers electricity at wholesale rates.
In a world first Mojo decouples electricity consumption from profit by offering a subscription model and wholesale rates to its customers, at rates approximately 30% less than the other retailers.
Consumers no longer have to suffer the common gripes associated with the other major providers. Similar to FOXTEL’s model, Mojo charge an up-front monthly fee for what they call an EnergyPass, that allows customers to access exactly the same wholesale rate charged. So Mojo’s interests are completely aligned with their customers. And Mojo will earn further profits through working with customers to help them save even more money through solar, energy storage and efficiency.
Mojo Co-Founder James Myatt believes the Mojo offer is a real game changer saying, “Australian families will now have a retailer absolutely aligned to their desire to pay less for the electricity they need. We can easily look at your current bill and estimate how much you are going to save annually based on our model and your current electricity consumption. We will then help our customers to access even cheaper bills through solar, storage and energy efficiency.”
Who is Mojo’s target market?
The Mojo model is of most benefit to those households who are above average consumers of electricity, typically those with air conditioning or swimming pools.
According to independent analysis by the Australian Consumer, Retailer and Services (ACRS) unit at Monash Business School, NSW families who use more than the average amount of electricity per year would see significant ongoing yearly savings with Mojo, when compared to the three major retailers’ standing tariffs. For example, a family spending about $750 a quarter on electricity would save between $415 and $630 per year depending on whether they were with Origin Energy, Energy Australia or AGL. Households spending more than $750 per quarter would reap even greater savings.
Although these retailers do offer discounts, Mojo believes that most customers have either never moved off the standing tariff or their discounts have expired. Mojo points to Origin Energy’s FY 2015 results presentation where the company disclosed that the impact of discounts as a percentage of retail revenue was only 4%. The company believes the picture is similar for the other two major retailers.
Even if consumers can overcome the many caveats and challenges in accessing discounted rates from the major retailers for a sustained period of time, the ACRS research shows that for a consumer spending around $750 per quarter, the total costs of the Mojo subscription model over a five year period is lower than any other plan, unless consumers are allowed to – and remember to – renew the maximum available benefit available to them in year one for another four consecutive years.
What makes Mojo necessary today?
“We know many people are dissatisfied with their electricity retailer. New independent research found less than half of all people surveyed think they are being charged fairly for their electricity,” Mr. Myatt said.
“One reason many don’t change their retailer is because they think it is too hard, with 55% of people surveyed saying switching electricity retailer is a complicated process. The reality is it couldn’t be easier; people can go online and sign up in under three minutes.”
Mojo is launching first in NSW and plans a major education and advertising campaign to make consumers aware of the opportunity it presents. It recently received a $5 million investment from the Southern Cross Renewable Energy Fund which is backed by the Australian Renewable Energy Agency (ARENA).
“The independent research also shows that even though retailers don’t supply the electricity, in NSW, for example, that’s done completely separately by three government-regulated entities, one in five people think switching retailers could actually affect their supply. That’s another myth we plan to bust,” Myatt said.
To access wholesale prices, customers simply need to visit mojopower.com.au and select the EnergyPass™ option that best suits their needs. Mojo will arrange the transfer of their account from their existing retailer. EnergyPasses™ start at $30 per month, or an effective $22.50 per month, if a customer pays annually up-front.
Who are the people behind Mojo?
Co-founders James Myatt and Darren Miller, both have extensive careers in the business and energy sectors. James has over 30 years’ experience in the energy sector in Australia and the US. He was the founder and CEO of Australian Power & Gas (ASX:APK) which he started in 2007 and grew to around 350,000 customers and $500m in revenue at the time he sold the business to AGL in late 2013. James is also a founder of Entrust Energy LLC based in Houston TX which is one of the fastest growing energy retailers in the US. He has complemented this with time as the CEO of Sungevity Australia, a subsidiary of Sungevity Inc. based in California.
Darren has almost 25 years’ experience in corporate finance, private equity, high tech and energy industries. He spent almost a decade working at the highest levels of the Packer family’s investment companies (PBL and CPH) where he was involved in M&A, strategy and operations of investee businesses such as Nine, Foxtel, Hoyts and Ellerston Capital. In the past three years, Darren has worked in the solar industry. Prior to founding Mojo, Darren was the Director of Asset Finance for Sungevity Australia where he pioneered the product development and financing of residential solar power purchase agreements.
In May 2016, Mojo welcomed Kim Williams AM to the team, the former Chief Executive of News Corp Australia and FOXTEL, as Non-Executive Chairman. His experience at FOX SPORTS and FOXTEL is particularly relevant to Mojo. He pioneered many of the digital broadcast innovations in Australia, built large subscriber bases and negotiated a complex regulatory environment to forge very profitable, consumer focussed businesses.