Swedish Startup Space

Can flat rate disrupt electricity retailing in Sweden?

Written by on February 25

Last Thursday, web entrepreneur Anton Johansson launched Alltid. It’s a new kind of electricity retailing service, with a simple concept: you pay a fixed amount every month with no extra fuss.

Yes, flat rate.

Let me make it clear, this service will not appeal to everybody. It’s not even available for all of us. If you are not living in an apartment you cannot register for the service.

The target audience are quite clearly young adults who are used to fixed-rate subscription services such as Spotify, Skype and Netflix every day. The language, feeling, and design kind of makes you think you are buying music rather than electricity. The communication is transparent and direct.

In many ways, it feels like Johansson is influenced by the recent growth and success of Tink, the mobile app that is disrupting the personal finance sector in Sweden. Like Tink, Alltid customers will have an app that encourages energy savings using “gamification” and will give feedback as time goes by.

Like Tink, Alltid customers will have an app that encourages energy savings using “gamification” and will give feedback as time goes by.

On starting Alltid

Johansson explained that his experience with the electricity companies was complicated, dull and boring. He thought to himself, “why not create a simple flat rate contract, bundle it with a slick mobile app and make the whole experience a bit more 2014”?

Startup way of doing things

Maybe even more interesting is that Johansson has the potential to inject the “startup way of thinking” into an old, slow-moving industry.

When I ask him about how his background as a web entrepreneur will benefit him, Johansson comments: “working more like a startup will be one of our big competitive advantages, being faster and more innovative than others, always learning and adapting.”

And to be frank, flat rate pricing is only one of many possible ways to disrupt the traditional players. It will be interesting to see how Johansson can marry the “subscription-economy” with electricity retailing.

Objections

When reading through news comments and social media, the most common criticism of Alltid so far is that the incentive to save energy will vanish, due to the flat rate model.

Perhaps true, although interestingly humans are not rational machines whose only interest is to lower costs. People recycle every day, not due to cost reasons but because it feels good.

People recycle every day, not due to cost reasons but because it feels good.

Non-profit electricity retailer GodEl has already proven that money is not everything even when it comes to the electricity bill. “Not being evil” was enough for many Swedes to switch their supplier of electricity.

All this being said, Johansson and Alltid are not without their fare share of challenges.

He has chosen to target people living in apartments, since their consumption is more predictable. This also means that the stakes and interest in their electricity consumption is lower. It seems Johansson is focused on delivering a Tink-link experience, but whereas Tink handles your whole economy, Alltid will handle less than 200 SEK a month on average. Even with gamification, will he be able to create enough interest around it?

To combat this, Alltid will try to focus more on sustainability. The problem is that the environmental footprint of the household electricity is quite small compared to many other factors in our daily life. A cynic might say that this will take focus away from more pressing environmental issues. An optimist would say that whatever pushes a sustainable mindset is positive.

In any case, an interesting fact is Alltid will have a business model completely aligned with energy savings. Which other electricity dealer can say that?

A clean slate

So what are we dealing with? Anton Johansson is a web entrepreneur who has found a new playground. With a clean slate, he has no preconceived ideas about how the mechanics of an electricity retailer “should work”. I recently listened to an interview with Spotify founder Daniel Ek, and Ek mentioned that, the fact that he knew so little about the music industry was a massive factor – they were, in his words, quite naive – which helped them push forward when many would’ve given up. If Johansson can adopt a similar approach to the electricity industry – he may be onto something.

The future will tell whether he is right or wrong. I’m just wondering if traditional electricity retailers will know what hit them…

I’m just wondering if traditional electricity retailers will know what hit them…

For more information, head over to Alltid.se.

  • Michael Höglund

    Great idea. One of those you go ‘hmmm, yeah that is how it should work”. How does the business side of this look? Margins etc? Flat price to customer vs buying from Nord Pool, futures, spot price? Really interesting approach.

    • Anton Johansson

      Hi Michael! Glad you like it! Hehe, I agree. This is how it should work. That was the starting point for me, “ok how would I want to buy electricity?” and then we designed the process from that ideal experience. We have long way before it’s perfect, but we’re on good track hopefully.

      It’s a pretty solid business case in the background so i can’t explain everything in detail, it’s to complex for that. But we, like everyone else, is buying electricity from Nordpool but we take a little bit higher risk. However, since we’re only selling to apartments, we can calculate it pretty accurate. Houses etc are much more complex, but it would be awesome to find a better solution for them in the long run as well.

      • Michael Höglund

        Cool, thanks for providing some more detail, Anton!

        • Anton Johansson

          Thanks for asking!

Subscribe to our mailing list for exclusive news from the Swedish startup scene