In the coming weeks I’ll be addressing a number of utility-related organizations, including delivering keynote presentations at the National Rural Electric Cooperative Association’s 2012 Touchstone Emerging Technology Conference in Fort Myers; the Minnesota Rural Electric Cooperative’s Annual Conference in St. Paul; and the Western Energy Institutes 2012 Spring Energy Symposium in Las Vegas. I’ll be covering a great many issues and discussing a number of trends but I’d like to highlight five major trends I believe every utility industry leader and professional needs to place on their strategic planning radar screen, now:
Trend #1: Home Energy Management is About to Become Fun, Sexy and Profitable.
It should come as no surprise that Best Buy has recently announced its intention to get into the field of home energy management. The retailer, which has been hammered by disruptive changes to its music and consumer electronics business, is searching for new profit opportunities and has come to the realization that the proliferation of “smart appliances,” “smart meters,” and consumer-friendly devices such as the Nest thermometer are going to enable users to assume a greater degree of control over the management their home energy usage. This trend will be facilitated by the continued growth of smartphone applications (and gaming dynamics) that will allow customers to more easily monitor and control their appliances and thermostats when they’re away from home. The net effect will be that customers will become more comfortable with “dynamic” or “real-time” pricing because they can use the aforementioned tools to dramatically lower their energy bills.
Trend #2: Batteries, Transistors and Wires, Oh My!
The soft, hidden underbelly of the transmission grid is about to get a significant makeover as a result of continued advances in high-temperature superconducting wires; the creation of solid-state transformers; and higher density, high storage grid-capable batteries. Each technology, in turn, will have profound implications for how electricity is transmitted, shared and stored. HTSS wires, which are already being installed in some urban areas, are likely to decrease in cost. As they do, more utilities will deploy the wires to reduce line-loss and, possibly, avoid having to install new transmission lines. (This is because the new wires will be able to carry more capacity in the same amount of space as the older wires.) Solid-state transformers are a truly disruptive technology that will not only allow distributed energy sources such as wind farms to connect more efficiently to the grid, they will also allow for customers who are creating their own energy to sell that power back to the utility (and maybe even other customers). Lastly, better battery technology will allow excess energy created from wind turbines and solar panels to be stored and then used when that energy is most needed. The effect of the technology is that it will make the energy more reliable by reducing the “variability” of wind and solar power.
Trend #3: Your Next Competitor is Your Customer
Solar cells are being made more efficient everyday. The technology is also dropping in price due to continued advances in manufacturing technology. Solar cells are even being incorporated into windows. It won’t be long before the technology makes a sound financial investment for the average homeowner. When this happens, the number of systems deployed will skyrocket. Solar, however, is not the only distributed energy technology getting better and more affordable. Micro wind turbines are improving and it is feasible that within a few years’ retailers such as Home Depot and Lowes will have “plug and power” micro wind turbines for sale.
For a hint of what is coming, look to Germany. Although renewable energy’s advance has been fueled by generous government subsidies in that country, more than 50 percent of all renewable energy in Germany is now produced by citizens and not by the utilities. Lest you think this insignificant, close to 20 percent of Germany’s energy comes from distributed, renewable sources. In other words, ordinary citizens now produce 10 percent of the country’s energy. As renewable energy reaches price parity with coal and nuclear-generated power, this future will come to America. What it also means is that your customers will soon become quasi-competitors.
Trend #4: Your Business Model is Shifting Under Your Feet
Before you dismiss Trend #3 (as many industry insiders do), you’ll want to learn more about how some innovative entrepreneurs and businesses are planning to invade your space. Sun Edison, for example, is now taking all the risk out of buying solar panels for large companies such as Staples by agreeing to purchase, install and maintain the cells in exchange for the customer agreeing to purchase the electricity created from those panels at a cost below what utility companies are currently providing. Soon, Sun Edison will make the same deal available to home users. Bloom Electron, a division of Bloom Energy—the fuel cell manufacturer—is doing the much the same thing. They are providing the fuel cells free-of-charge in exchange for the customer agreeing to purchase electricity from them for an extended period of time (10 years) at a fixed rate. (In this case, though, the division must still rely on California’s generous subsidies for renewable energy). Nevertheless, the writing is on the wall. New business models are making electricity produced from distributed, renewable energy sources more affordable for customers.
Trend #5: Abundance, Not Scarcity May Be Your Biggest Problem in the Future
The future often has a funny way of turning out differently than most people expect. Today, it is conventional wisdom that the world’s energy needs will grow significantly in the years ahead and the only way to meet this growing need is build more coal and nuclear power plants. This future may come to pass but what if Smart Grid technology, LED lights, real-time pricing and home networks dramatically reduce energy usage? What if the price of solar cells and fuel cells drop radically and are installed in greater-than-expected numbers? And what if wind turbines, tidal power, geothermal technology and battery storage all improve to the point where the world has more than enough energy? In short, what if the abundance of electrical power—and not its scarcity—is the greatest problem facing the industry in the future?
Are you prepared for such a future? Are you prepared for any of the other aforementioned trends? The time to begin thinking about these accelerating changes is not in a few years. The time is now.
For related articles on the utility industry by futurist Jack Uldrich, check out these older posts: