Vast Majority of Utility Stakeholders Expect a Major Shift in Business Models Because of Distributed Energy
Navigant and Public Utilities Fortnightly Release State & Future
of the Power Industry Report
Today, Navigant (NYSE:NCI) and Public Utilities Fortnightly
(PUF) released “State
& Future of the Power Industry”, a special report exploring the
current status as well as the future of the electric utility industry.
The report signals change is coming, and while 90% of utility
stakeholders say that distributed energy resources (DER) will force a
shift in utility business models, they are split (50-50) on the timing
of this shift.
The report presents findings from a PUF reader survey of 366 utility
industry insiders on the future of electricity, summarizes
“off-the-record” conversations held by PUF editor Steve Mitnick with
utility leaders about electricity’s future, and includes perspectives
from experts within Navigant’s Global Energy segment on where they see
the industry shifting and evolving.
"This study points to several forces that will continue to transform the
way utilities do business. Although DER is already growing faster than
central station generation this year in North America, this trend varies
by region as the policy approach, regulation, market dynamics, and
structure differ,” said Jan Vrins, leader of Navigant’s Global Energy
segment. “North American utilities are at various stages of integrating
distributed generation, demand response, energy efficiency, electric
vehicles, and energy storage. Many are unprepared for the dynamic impact
these resources will have on integrated resource planning and current
grid operations. Since there is no one-size-fits-all approach, Navigant
has developed a flexible playbook that helps a utility develop an
integrated DER strategy and approach, based on its maturity level and
the market in which it operates.”
Although more than half of survey respondents believe the role of
regulated utilities would not undergo significant change in providing
services to customers within the decade, most recognize that advances in
technology and changing customer demands present new opportunities and
challenges. These findings suggest a more conservative approach by
utilities, with 70% of respondents indicating that a utility’s ability
to provide reliable power is still the most important role,
significantly ahead of affordable and green power.
Additional key findings from the survey include:
-
Solar Photovoltaic (PV) (70%), energy efficiency (42%), demand
response (40%) and energy storage (39%), were named as the most
prevalent DER solutions in terms of capacity by 2025.
-
More than 90% of survey respondents believe that the growth of DER
will force a major shift in utility business models.
-
Almost 50% of industry respondents pointed to a supportive regulatory
environment as the most important tipping point for moving
aggressively into owning and operating DER.
-
Almost 50% of the survey participants believe that by 2025 there will
be five or more states to adopt a distribution-level system operator
model.
-
Over 80% of the respondents believe that residential and commercial
customers’ demand for choice and control will change moderately (50%)
or substantially (33%).
-
Emerging customer engagement channels that respondents believe will be
most widely used to deliver value to customers are: apps (55%),
behavioral & analytical demand-side management (38%) and integrated
energy services platforms (37%).
-
Survey findings point to an increasing threat of cyberattacks, as a
result of increased connectivity on both sides of the meter:
-
55% of the respondents expect there will be one or two serious
electric service disruptions in the coming years.
-
30% expect there will be several serious service disruptions in
the coming years.
“While utility stakeholders voice widespread consensus that the industry
is facing profound change and advances in technology and changing
customer demands present new opportunities and challenges, the lack of
urgency to change the services offered to customers that surfaced in
this report is concerning," added Vrins. "Providing reliable, safe, and
affordable power are table stakes, and utilities must evolve their
business models to include sustainable, intelligent, and distributed
elements of the energy cloud in order to serve their customers and
protect shareholder value.”
To see the full report and to learn more information about Navigant’s
Global Energy segment, click here,
and join the social media conversation through #EnergyTippingPoints.
About Navigant
Navigant Consulting, Inc. (NYSE:NCI) is a specialized, global
professional services firm that helps clients take control of their
future. Navigant’s professionals apply deep industry knowledge,
substantive technical expertise, and an enterprising approach to help
clients build, manage and/or protect their business interests. With a
focus on markets and clients facing transformational change and
significant regulatory or legal pressures, the Firm primarily serves
clients in the healthcare, energy and financial services industries.
Across a range of advisory, consulting, outsourcing, and
technology/analytics services, Navigant’s practitioners bring sharp
insight that pinpoints opportunities and delivers powerful results. More
information about Navigant can be found at navigant.com.
About Public Utilities Fortnightly
Public Utilities Fortnightly (PUF) has been, since 1929, the
magazine of record for the electric and natural gas utilities industry.
It is a forum for commentary, opinion and debate on utility regulation
and policy. PUF is must-read for the broad readership of some fifteen
thousand-plus senior utility managers, regulators, policymakers, and
leaderships of the asset owner/developer, advocacy, financial, legal,
engineering, economic and consulting communities that must address the
industry's challenges every day.
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