The need for utilities to consider energy as a service is urgent. The market will rapidly get flooded with providers like Google and Opower that provide consumers with ways in which to identify, address and manage energy efficiency and costs. This will lead to further loss of control over business. In several instances for example, with the rise of community generation in Australia, utilities will even need to reduce their traditionally spread out transmission infrastructure and increase focus on intra-customer exchanges, and grids that serve as a back-up.
The new opportunities before utilities
Amidst the gloom and confusion of a changing future is a very real opportunity for utilities. Energy markets will not disappear. Instead, they may even expand. Revenues from delivering power may dwindle, but new revenue opportunities from services will be on the rise. These opportunities could include:
- Personalized Services for Customers such as demand management, customized and personalized rate plans, consumption optimization, conservation services, device insurance, generation and distribution installation, trading services, device and infrastructure maintenance and support, and social media collaboration. Retailers worldwide are looking at options and opportunities today to offer these as value added services, as they continue to face headwind in their mainstay business.
- Monetization of Network Assets will become important with the growth in distributed generation. The charge paid by customers for network usage is dwindling. Network companies can reinvent themselves by allowing capacity usage by 3rd parties and generate additional revenues. Distributors are looking at options to increase their customer affinity and opportunities to bridge the increasing gap between the investments in network and the yearly return. The safety and security of the network still lies with them so regulatory obligations are still protected and honored.
- Creation of Meter Data Services that accurately and frequently measure the generation, delivery and supply of energy will be at the heart of the federal energy economy. Meter data is the basis for all processes across stake holders – generators, distributors, retailers and 3rd party providers. There will be demand for a separate entity responsible for meter data acquisition, processing and dispensing to the market. Models for this exist in UK and Australia and more advanced models are under regulatory consideration.
- Federated Energy Exchange will become the norm. This is the ability for end consumers (commercial or residential) to sell energy between themselves and is the final level of federation. All stakeholders will have the opportunity to play a role – in terms of offering platform, capacity and energy services, data management, commercial reconciliation and payment processing.
- Support for Community Grid is already on the rise, especially for remote locations, defense establishments and now for co-located homes and apartments, where common solar generation and storage integration is possible, at a much better ROI. New service offerings need to be created to serve these entities in terms of network security, asset management, power quality, customized tariff and trading facilities.
- Non-Energy Offerings will be introduced. As federation and the entry of non-utility players in the market grows, the nature of offerings will change from pure energy based services to adjacent services. These can be in the form of bundled insurance, information on appliance quality and ratings, integrated supply of energy and data and many more. Non-utility players are likely to disrupt the market with such offerings and utilities need to be prepared for the same.
The customer focused 21st century utility services model
Service orientation will be the need for de-regulated markets. Regulated markets will need to change as well. For these markets, much depends on the pro-activeness of the regulator. Some geos such as California and New York, where change is gaining momentum, are showing the way. Here, for the last decade, plans have been focused around energy efficiency, conservation, reduced emissions, renewables and new efficiency standards for appliances. These states are reaching tipping point and will soon see the emergence of 21st century energy as a service models. These models will be more customer-focused and reliant on smart grids that accommodate distributed energy resources (DER). While the change is dramatic in pockets of the energy market, it won’t stay localized for long. The changes will sweep across the industry. Over the next few years, energy utilities will be forced to re-orient themselves towards services. This implies a change in operating model, business model, and a higher reliance on IT than utilities are currently accustomed to. The technology aspect, although appearing distant at the moment, cannot be over emphasized: without a technology mindset, utilities will be handicapped and unable to make quick progress towards a services model.