Since the first of the year, I’ve attended several industry conferences, and it’s no surprise that electric power industry transformation is the common theme of not only all the events, but even the speakers’ messages. Never in the history of this industry has such drastic and rapid change occurred. The 100 plus-year-old utility business model has been turned upside down. Selling kilowatt hours, or electricity generation, is quickly fading as the main value proposition for utilities.
At the Oracle Industry Connect conference that I attended in March, Raiford Smith, Entergy’s vice president of energy technology and analytics (a new position in the company), said utilities must develop a sustainable business model. He believes utilities that own and operate grids will remain relevant because “the value proposition is now in the grid-no longer in generation.”
Smith even went so far as to say he doesn’t know why utilities would want to own power plants anymore. Load growth in most of the developed world is stagnant or declining. Raiford said that even when communities develop microgrids and customers become self-generators, which allows them to be self-sufficient, they will still want to be connected to the grid because part of these customers’ value proposition is their ability to sell excess power to others, buy excess power when needed (or when it’s cheaper) and ensure they have reliable electricity supply. He believes the grid will be the backbone of many new business models.
At this same event, I conducted one-on-one interviews with two utility vice presidents-Matthew Ketschke, Con Edison’s vice president of distributed resource integration, and Carlos Nouel, National Grid’s vice president of new energy solutions. Both are involved in developing new revenue streams for their companies and each mentioned that they are leading company organizations that are relatively new. These two titles seem to validate Smith’s views that traditional electricity generation is no longer where it’s at.
Manny Cancel, Con Edison’s vice president of IT and CIO, mentioned that to create new value streams, utilities must determine what consumers want and then partner with third parties to make sure they can offer those things.
As I interview experts, attend events and study information that lands in my inbox, I’m learning how progressive utilities are working to stay relevant. As the cover implies, this issue is dedicated to customers. You’ll also see articles on net neutrality, block chain and smart cities-topics that weren’t part of the conversation two or three years ago.
The roles of electric utilities and the electric grid are changing and we all must change with them or we won’t be where it’s at.