Apple, the California tech giant, quietly filed with the US Federal Energy Regulatory Commission (FERC) last week to set-up Apple Energy, a subsidiary created to sell the excess renewable energy it generates directly to customers at market-based prices.
Let's just dwell on that for a second – Apple, the company that disrupted the music industry years ago with the iPod and ushered in the era of mobile computing (not to mention turning the mobile phone industry on its head) with the iPhone, has applied for government approval to sell energy, just like traditional energy companies do.
When it comes to symbolism, this move has a lot of it. But what does it mean for incumbents, like utilities? Let's maybe start with what it doesn't mean. Like the patents Apple regularly files with the Federal Communications Commission, the company's FERC filing doesn't necessarily hint at an imminent product launch or a massive change in strategy.
So while Apple certainly wants to start selling the extra energy its 200MW plus renewables portfolio generates in the next 60 days, don't expect to see chief executive Tim Cook stroll on stage anytime soon to announce that Apple's next big move is its transformation into an energy company.
That's not just an educated guess, it's precluded by the FERC filing. One of the things Apple is asking is to be able to sell energy directly to end users at retail prices on the back of being a new entrant to the energy market, with no capacity to influence prices.
Where Apple Energy makes immediate sense is in the context of Apple's goal to be 100 percent renewables powered. Put simply, there will be times when Apple will be producing more energy than it can use and it makes perfect sense to trade it. Arch-rival Google, by the way, already does that.
So does that mean incumbent power players can breathe a sigh of relief? Only if they want to be irresponsibly complacent. As E.ON chief executive Johannes Teyssen put it in 2013, when Google acquired smart thermostat maker Nest Labs: “Just the fact that companies like Google are looking and investing shows that you had better prepare yourself for a new kind of competition.”
Besides, while Apple might not have disruptive energy designs today, that doesn't mean it won't tomorrow. After all, Apple is widely thought to be building an electric car.
Electric cars need to be charged and a future where they are more prevalent will drive demand for electricity. For Apple, a company with a notoriously tight grip on its supply chain and a penchant for all things proprietary, having a stake in the energy supply business could make a lot of long-term sense.
Flights of fancy aside, here's the larger point: five years ago, if we had mentioned that Apple and Google would be in the business of selling electrons most people would've laughed us out of the room. More importantly, corporates are not only selling energy, they are also buying it in large amounts from non-utility sources. In 2015, consultancy FTI pegged the corporate PPA market at 5.5GW.
All of which reinforces a larger trend unfolding in the infrastructure industry – everywhere you look, monopolies are increasingly being challenged. Once upon a time, everyone got their power from a utility company. Nowadays? Not so much. But while energy might be riper for disruption than other infrastructure sectors, disruption, a lot of it driven by technology, is evident in everything from toll roads to car parks. In that sense, Apple selling energy is just another reminder of how traditional monopolies are being broken.
Those in the infrastructure industry with a more private equity approach take a lot of flak from certain corners of the market for their shorter-term view of the asset class. But as the longevity of certain assets is increasingly called into question, the larger narrative of infrastructure as a long-term asset class might need some fundamental re-thinking.