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German utilities prepare for future energy sector dominated by Apple and Google

German utilities are buying into tech companies
German environmental policies are huge challenge for utilities

After revolutionizing sectors such as music and retail, high tech has now set its sights on energy and European utilities are worried, according to Reuters.

European utilities, such as E.ON and RWE, are already in some trouble due to the German policies of shutting down nuclear energy and phasing out coal and gas-fired generation. As if that were not enough, “RWE sees it as only a matter of time before large technology groups start eroding market share in power, where customers would jump at the opportunity to cut their bills and increase efficiency,” writes Reuters.

McKinsey consultancy group reports that new businesses, including renewables, could generate $26 billion euros in additional profits for the European power sector by 2020. Most of that will go to new market entrants, with current utilities pocketing around 15 percent. These utilities are not worried about each other.

[Related: Lessons From Germany: Can the US Succeed With Its Own Energiewende?]

“In the future, we'll be competing in a whole different arena, in which technology firms will play a greater role. That's the playground we have to prepare for,” said Thomas Birr, head of strategy at RWE, Germany’s second-biggest utility, speaking to Reuters.

One of the last remaining assets that European utilities have, are the cherished customer relationships they maintain. In light of high tech’s moves into the energy sector, these relationships are vulnerable. In an attempt to counter, utilities are throwing money at technology projects left and right.

High tech sees its biggest opportunity to capitalize on the energy sector in the “smart home,” which utilities have been unable to tap. This explains why last year Google bought Next, a smart thermostat maker hoping to set the standard for how household devices link to each other and electricity grids.

[Related: Germany Hits Renewable Energy Use Milestone]

The apps that customers will need to interact with their smart phones will usually be installed on smartphones with the imprint of Google or Apple.

Reuters reports that RWE and E.ON are also looking into energy storage. They have stiff competition there too now that Tesla has unveiled Tesla Energy, storage systems and batteries for homes and companies.

Back in the U.S. Google and Apple are investing in solar energy projects. Once the technology develops in America, it’s only a matter of time before it reaches Germany.

[Related: Germany Takes Top Spot on ACEEE 2014 International Energy Efficiency Scorecard]

“’For the first time in 120 years, consumers have a choice about where they go for their power,’ said Alex Laskey, president and founder of U.S.-based Opower, whose flashy billing software tracks how much power is consumed by households, when and at what costs,” reported Reuters.

The German utilities are not going quietly into the night. E.ON has invested in Opower in the hopes that it will benefit from any technological advancements that may change the industry down the pike.

[Related: Upper House of Germany's Parliament Passes Renewable Energy Law]

In addition to Opower, it has also bought into QBotix, based in California, “which builds robots that travel on rails through solar parks and adjust panels so that they constantly get most of the sunshine, saving costs by up to a fifth,” wrote Reuters.

In spite of these acquisitions the state of the German energy market in the future is a big mystery. German utilities have been hit very hard by Germany’s recent environmental policies, designed to deal with climate change and the future scarcity of oil.

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