DERs Undermine the Utility Business Model

Five years ago, the Edison Electric Institute (an association representing all U.S. investor-owned utilities) published Disruptive Challenges: Financial Implications and Strategic Responses to a Changing Retail Electric Business. Among the main drivers cited were the increased penetration of distributed energy resources (DERs), and the development and creation of incentives for DER and other demand-side technologies. The report stated that these “disruptive challenges” all create adverse impacts on revenues and investor returns, and recommended “proactive assessment and planning”.

Four months later, the Electricity Innovation Lab at the Rocky Mountain Institute published New Business Models for the Distribution Edge. Its Executive Summary stated that “the growing role of distributed resources in the electricity system is leading to a shift in the fundamental business model paradigm of the industry”. The report concluded by proffering an “emerging ‘solution set’ of new business models”.

A year later, the Hawai‘i Public Utilities Commission published the Commission’s Inclinations on the Future of Hawai‘i’s Electric Utilities. This “Inclinations” report offered vision, business strategies, and regulatory policy changes required to align the business model of the Hawaiian Electric Companies (the state’s largest utility) “with customers’ interests and the state’s public policy goals”.

And one more. In 2016, the Massachusetts Institute of Technology (MIT) Energy Initiative published Utility of the Future. The report recognized that emerging distributed technologies are driving a framework designed to enable an efficient transformation in the utility business model.

It’s no secret: DERs and related technologies are undermining the traditional utility business model. Since its inception in 1983, net energy metering has consistently proven to be the most effective method of spurring the proliferation of DERs. Our latest blog post, Net Energy Metering Launched the Distributed Energy (R)Evolution (and companion position paper), describes an example of how a NEM law directly affected the number of rooftop solar installations, and discusses a few related “disruptive challenges”.

NEM laws have recently been softening. Changes in the method of distributed generation compensation has achieved a more middle ground in some states (Hawai‘i, New York, Utah, and others). Nonetheless, while customer-centric NEM laws are slowly dwindling, the DER revolution, and its profound ramifications, is here to stay.

Presenting with Poise (part one)

You’ve probably experienced this before. The presenter displays a slide and says, “I know you can’t read this, but…” But what? Your presentation slides are a visual representation of your words, so why include a visual your audience can’t read?

As a presenter, you essentially have three choices for this situation.
1. Exclude the slide. This is not always the best solution because now you can only make your point verbally.
2. Summarize your point on a slide you create and that your audience can read. This is probably the best solution.
3. Include the original non-readable slide in an appendix section of your slide deck. This is actually a corollary to solutions 1 and 2, but it only works if you are distributing the slides.

Given your particular circumstances, you could devise another solution, so long as that solution involves slides your audience can read.

Need help with your presentation skills? Contact us.

Attend an Integrated Resource Planning (IRP) Summit

In a past e-News (Vol. 3 #18), I discussed an integrated resource planning study I was conducting. The trends revealed from that study form the foundation of topics for the EUCI Integrated Resource Planning (IRP) Summit being held 16-18 April 2018 in Portland, Oregon.

I will kickoff that Summit with a presentation on the numerous trends in integrated resource planning—trends that can help keep you abreast of the emerging changes in resource planning.

The conference brochure explains all. Receive a 10% discount when you register here; click and Register tab, then apply the code IRP18SOL on the final payment screen. You can also register four people for the price of three—a 25% discount.

This conference is by resource planners, for resource planners, with practical, actionable topics. Keep abreast of the wide-scale transformation resource planning is undergoing by attending this Summit.