The electric utility market is in a state of transformation, driven by the development and growth of a new class of distributed energy technologies – rooftop solar PV to start, but eventually behind-the-meter batteries, smart and flexible load controls, and grid-integrated electric vehicles, which are also on the rise. And there is no guarantee that today’s electric utilities will maintain their position as arbiters of how this growth takes place – or that they’ll profit from the transition.
Unlike almost every other major development in the electric industry over the past 100 years, today’s changes are not coming from the top down, but rather from the bottom up – or, perhaps, from the edges in. For the electric grid, the edge consists of customers – the residential, commercial and industrial “accounts,” “loads,” or “ratepayers,” – who now have the opportunity to reduce costs and meet sustainability goals, participate in power markets, and create more transparent and customizable relationships with their energy providers.
And those energy providers do not necessarily have to be their traditional distribution utility, opening the threat of “disintermediation” by players such as retail energy providers in competitive markets, enablers of direct access or community choice structures in reformed vertically integrated markets, and the aggregators of the PV, batteries, EVs and smart loads that are making this transformation possible.
This transformation is creating both threats to and opportunities for change in the traditional way of doing business. Utilities and other energy companies have to address this challenge head-on by developing new product lines, improving customer service, bolstering reliability, and reducing costs. Regulators are taking note of the benefits technology can offer to both customers and utilities and exploring new incentives and business models.
In this report, we delve into this dynamic set of developments and suggest a new way of looking at the future of the electricity system, a paradigm we call DynamicEnergy. It’s an energy environment in which two-way transactions become the new normal. In the DynamicEnergy model, load can follow supply as reliably as supply now follows load, with customer behaviors triggered by price and engineering conditions, and with the ever-shifting demands and supplies of the energy network controlled by intelligent and automated equipment.
Through this analysis, we will seek to illustrate how the Next Generation Utility (NGU) will leverage new technologies and incorporate them into a broader reimagining of the electricity market to set the stage for a DynamicEnergy future.