Over the past year, I have addressed a great many organizations involved in the utility industry. Part of my message has focused on how technology is transforming many aspects of their business. Another part of my message focuses on how advances in solar, wind, clean coal, fuel cell technology, geothermal, marine power and demand-management technologies—which I covered in my latest book, Green Investing — will change their business.
The biggest part of my message, however, centers on how industry leaders need to “jump the curve” and begin thinking much differently about the future.
To this end, there is a wonderful article in this month’s Fast Company entitled ”Beyond the Grid.” From my perspective, the operative quote is this one, ”Distributed energy is happening.”
Let me repeated that: ”Distributed energy is happening.” It is a message everyone involved in the utility business should take to heart—immediately. Due to politics, the regulatory environment, as well as the inertia of human behavior, distributed energy and the micro-grid won’t arrive tomorrow but innovative utilities need to begin planning now—not in 5 or 10 years—for this new future.
Many utilities will argue that due to economies of scale that they can continue to produce and transmit electricity better and cheaper. And this is true—today.
As long-time readers know, I am a huge fan of history and years ago executives in the railroad industry laughed off competition from the airline industry because their consultants argued that rail would always be cheaper than flight. These consultants failed to recognize that customers would value time and convenience more than price. In much the same way, the microgrid will yield benefits beyond price.
In much the same way, executives at Ma Bell also laughed off the idea that their exulted status could be challenged. Today, as we know, things are much different in the telecommunications arena. Could the same happen in the utility industry? Sure. Wind and solar power are not price-competitive with coal and nuclear power today, but they are improving quickly and grid-parity is on the horizon.
If one studies the trends and the technologies affecting the utility industry as I do, it is easy to imagine a much different future for the utility industry than the one that exists today.
The prudent utility companies should be planning today for how they intend to first survive and, then, how they might even thrive in this new environment.
