By 2018, 70 percent of utilities are predicted to launch major digital transformations in response to the challenges faced in their current business model. For utilities, vendors, and regulators, the challenge is not just to examine and optimize existing processes, but also finding entirely new ways of conducting business in a digital grid across a vast number of areas and functions.
In 2015, the International Energy Agency said the U.S. would need to spend $2.1 trillion by 2035 on grid technologies and infrastructure to prepare for higher penetrations of renewables. For the most part, utilities are responding. The inner workings of utility agencies may be an enigma for consumers, but many experts predict increased transparency.
“As distributed energy resources and consumer-driven investments continue to grow, enhanced grid transparency and the ease of access to distribution system information are both key to unlocking the full range of benefits of these resources,” said Sara Baldwin Auck, the Director of the IREC Regulatory Program.
Utility as a Platform
To survive the digital age, utilities are realizing they must market themselves to consumers as something more than just a utility company. From mobile apps to gamification, many utilities are partnering with third party vendors to help users track and control usage, pay bills, report outages, and receive notifications.
“If utility companies can figure out how to become trusted energy advisors and a convenient energy resource, they can increase their validity in the market while helping customers better manage their consumption,” says Yoav Lurie, founder and CEO of Simple Energy, a utility as a platform company that aims to empower people to save energy.
Lurie believes the utility as a platform model is the way of the future for utilities looking to evolve. Utility as a platform uses behavioral science, big data analytics, and digital marketing techniques to change how people save energy and how utilities engage customers.
“Different utilities have different reasons for their energy efficiency and demand response programs, from mandates to avoided capacity costs, but perhaps the biggest draw of the platform is how it changes the customer relationship,” explains Lurie.
Utility Scale and Rooftop Solar
Consumers are increasingly demanding access to clean energy. According to WindMade, one-quarter of the people in their global wind survey say they have the option of utilizing renewable sources. In addition, 48 percent of respondents would like utilities to supply renewable options to them and 49 percent are willing to pay extra for that service.
One region facing a renewable energy conundrum is one of the last places many would consider: Las Vegas. Yet in recent months, three of Nevada’s largest casinos – MGM Resorts, Las Vegas Sands, and Wynn – have announced plans to buy and produce more renewable energy.
“It is the perfect place to educate the public about renewables and the benefits they provide,” said Cindy Ortega, MGM Resort’s SVP and Sustainability Chief. “Las Vegas has 40 million visitors every year, so what better place to start telling this story?”
However, it's not without debate. We can expect to see the battle between casinos and NV Energy to continue if major consumers go off the grid because that results in a dramatic increase in residential utility bills. Businesses are looking to go off the grid because they can procure renewable energy on the open market. “It’s also good for business,” says Ortega, implying that resorts attract more consumers if they can boast energy efficiency.
Meeting Consumer Demands
From mandates to avoided capacity costs, utilities have different reasons for their energy efficiency and demand response programs. But perhaps the biggest draw of the platform is how it changes the customer relationship.
While electric utilities still hold the prized customer relationship, they face growing disruption from a number of energy service providers, such as third party-owned rooftop solar leasing. Changing the utility-customer relationship on their own terms is crucial for utilities as electricity starts to emerge from behind the meter.
Thus, modernizing the grid means more than installing new lines, but creating a multi-faceted grid that is forward thinking and consumer-driven.
“Consumers are at the epicenter of today’s energy policy conversations, and the energy choices we all make today are informing the investments, infrastructure plans, business models, and policy decisions of tomorrow,” said Auck.