Based on reporting from WSJ’s Bradley Olson, “Alphabet Inc.’s Google and Amazon.com Inc. are taking early steps to expand into the electricity business, as home-energy automation emerges as a rich source of customer data.”
Olson explains, “The technology giants aren’t interested in selling megawatts – at least not for now. But they are seeking ways to expand their smart speakers, internet-connected thermostats and other devices to harness information on consumers’ personal energy use.”
The future prospects for tech companies in the energy sector – though currently limited – are mostly unexplored. Olson writes that executives foresee “a future where solar panels, battery storage and even electric vehicles all become part of a smart-home ecosystem.”
David Crane, former chief executive of NRG Energy Inc., boldly stated, “In 10 or 20 years, the dominant retail electric provider in the United States is going to be Amazon or Google.” Mr. Crane supported his claim, saying, “They can provide lower cost and better service.”
Both Google and Amazon have made investments to help gain traction in the energy landscape. In 2014, Google bought Nest Labs, a maker of home-security cameras and thermostats, for $3.2 billion. Amazon acquired Ring, who makes video doorbells, for an estimated $1 billion last year.
What are the financial opportunities in this sector? Consulting firm Wood Mackenzie estimated that “spending on home-energy devices exceeded $40 billion in 2018 and is set to double in the next five years.”