We are in the midst of a time every bit as important and far-reaching as the days of Thomas Edison and Nikola Tesla. Today we are reinventing electricity to not only create a better standard of living, but equally important, to establish a better standard of working. Scroll down to read our Electronomics series that highlights the economics in play as our world shifts to the Electricity Economy.
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In the years after Edison brought forth Electricity 1.0, we continued to invent new ways to harness electricity to improve comfort, convenience and connectedness. Now as we move toward Electricity 2.0, the challenge is to combine updated technology with updated policy to enable not only better living, but better working as well. That's because Electricity 2.0 is directly tied to commerce and global competitiveness - and in this first segment of our new Electronomics series we'll explore the very interesting path that got us here.
One of the most thought-provoking speeches at this year's Accenture International Utilities and Energy Conference came from Google's Michael Lock. He offered a sneak peek at what's coming that will revolutionize the business world - and reasons why the electric power industry can't isolate itself from this next phase.
To date, the smart grid revolution has been mostly about technology. Going forward, it will increasingly be about new policies and new business models. But unless they change their attitude (and their aim), most utilities will have that new future imposed on them - and will probably be very unhappy with the result. Find out why.
Ironically, utility CEOs understand how technology change has turned other industries upside down -- telecommunications, retailing, music, newspapers, photography, etc. etc. Yet they seem to feel the electric power industry is somehow immune. They aren't asking the question that should be top of mind as new smart grid technologies turn their business upside down.
After dozens of interviews with utility CEOs and CIOs and attendance at five separate "future of the smart grid" workshops, we've culled from those executives and experts nine predictions about the forces that will be driving the smart grid's future, from choosy consumers and multiplying market choices to deepening jurisdictional tensions.
There are strong disagreements among experts in the smart grid industry about what will happen when, and what it will mean. But there's also violent agreement on at least five trends, including the technologies that will shift the landscape most dramatically.
What will the smart grid look like 25 years from now – and what paths will we take to get there? Click for a futuristic look at the three phases that will likely occur, albeit in different times in different places, as electric utilities roll out smart grid technologies.
Utilities are about to see dramatic pressures and changes, yet many utility executives are not preparing for the likelihood that the utility business model as they know it will undergo a significant transformation. Click for details on the three phases many experts believe utility business models will pass through during this transformation.
Consumers' appetite for value-added energy services – from consumption controls to demand response programs to green energy - will grow stronger over the next decade. As those services become more widespread and well-known, they will come to expect them from every utility. Find out why it is so important for utilities to proactively decide where they want to be on the "volume-to-value continuum."
We've talked about the "volume-to-value continuum" as a metaphor to help utilities prepare for the future and decide which role they will play as smart grid technologies force new business models to emerge. Click for a deep dive on what choosing the infrastructure - role providing commodity electrons - might look like.
Introduction of smart grid technologies will increasingly lead to consumer demand for value-add energy services from their utilities. That means utilities must proactively decide what role they want to play in that new world. As described in this segment of our Electronomics series, one choice will be an intermediary role where the utility aligns with partners to offer its customers new options.
As utility business models change to accommodate smart grid technologies and the increasing consumer demand for value-add energy services, utilities must decide what role they want to play. Some will choose a "wires only" infrastructure role, some will partner with third-party providers in an intermediary role and, as this article discusses, some will choose an innovator role where they conceive, develop and operate their own products and services.
The new business areas made possible by the smart grid are both opportunities and threats. The opportunities, of course, include better ways to serve customers, greater customer satisfaction, improved reliability and new revenue streams. But the threats are also diverse. Click to read about one that may prevent many utilities from reaching their potential, to the detriment of its employees, shareholders and customers.
The revolution that is accompanying the smart grid offers great improvements to utilities. It also poses grave dangers. One prime example is disintermediation, which in this case refers to third-party companies striking up a direct relationship with a utility's customers to sell them energy or energy services. Click for more on the impact disintermediation could have on utilities (and what they can do about it if they act fast enough).
New players are emerging who encroach on the profit pool, posing a "hollowing out" threat to investor-owned utilities that could be badly damaged by cumulative losses. Who are these new players? Think demand response providers, renewables developers, building automation vendors. As one utility CIO says, it's time to move beyond denial and acceptance toward proactivity.
Electronomics is our ongoing discussion of the changes now underway in the economics of electric power. Two developments around the world suggest that regulators and policymakers may force change faster than we expect.
It has taken a while, but more and more observers are calling the Texas "experiment" with retail competition a success... and even suggesting it may be a model for the rest of the country. Is it?
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