Be a trusted guide for customers
The customer’s ability to influence grid health emerged about two decades ago. That’s when utilities started to seriously pursue energy efficiency, encouraging customers to save energy by upgrading lights and appliances in homes and businesses.
With the rise of digital technology, distributed energy, and alternative purchasing options, the customer’s role continues to grow. New opportunities beckon to engage them in energy management. On the downside, customers can now buy less electricity from the local utility as competitive options draw them away, threatening to reduce the utility’s customer base.
At the same time, the new competitive marketplace is confusing. Few consumers understand energy technology or the language that describes it. Presented with an array of complex offerings, they need guidance. That’s the opportunity and where the utility comes into play.
Known to the customer as a trusted and familiar expert, the utility is a natural educator and facilitator in the new marketplace.
Harness the power of prices and devices
Still, no matter how trusted, utilities must think strategically to keep and capture customers. They are operating in a competitive arena with a commoditized product, one that consumers take for granted. That makes price the key pain point. A rising price gets consumer attention.
Knowing this, utilities are increasingly adopting granular pricing, so that customers can reduce energy use at the right times. Using automated technologies, this can be done with little effort on customers’ part.
In Texas, Austin Energy offers price incentives for customers who install smart thermostats used in the utility’s demand response program. On hot days when the grid is under strain and electricity prices are soaring, the utility can remotely adjust thermostats to slightly warmer temperatures. The measure doesn’t just save the customer money. When deployed across many homes, it spares grid operators from turning on expensive and often polluting generators.
Of course, customers can still adjust the thermostat if they wish. What might keep them from doing so? Con Edison in New York is researching time variant pricing strategies that may motivate and incentivize customers to change their behavior to be more grid-friendly. In one track of the pilot program, the utility is evaluating how customers optimize smart thermostats based on automated price-responsive technology that aligns energy usage with the cost of generating and delivering electricity at certain times of the day. Another track focuses on solar-plus-storage to determine how these combined resources can help optimize the customer’s energy use based on similar automated price-responsive control technology.
Support a community-based approach
While price is a powerful motivator, it is not the only one. Customers also increasingly want to support local, green technologies. As a result, community solar projects (e.g., solar gardens, shared solar, or roofless solar) are springing up nationwide.
Community solar allows customers to benefit from solar even if they can’t install panels on their own homes. Perhaps they are renters or their roofs are shaded. Some utilities see community solar as a threat; others embrace it as their own. Avista, Con Edison, Eversource, National Grid, and Xcel Energy are among some of the major utility names now offering community solar.
Of course, not all utilities are allowed to get involved in power generation. State restructuring rules prevent them from doing so, at least as regulated entities. In certain cases, however, they may create separate, competitive affiliates. Duke Energy offers a good example. Through Duke Energy Renewables the company is extending its business nationally and developing wind, solar, microgrid, and other distributed energy resources.
Innovate ahead of industry trends
Finally, electric vehicles (EVs) offer a new way for utilities to diversify revenue. Wood Mackenzie estimates that North America will have more than 13 million charging points by 2030, accounting for $13 billion in energy transactions. From coast to coast, utilities already are positioning to serve the market, with California leading the way. In January, PG&E announced the nation’s largest utility EV installation pilot, a $130 million program to install 7,500 Level 2 chargers.
These programs tell us two things. First, despite their reputation, utilities are becoming innovators. Second, although tremendous competition exists, utilities can retain customers and capture new ones by focusing on prices, devices, automated control technology and human behavior. Their decades of experience and long-standing relationship with customers gives them an edge. They just need to embrace it.