The electric utility industry is navigating massive waves of change. New consumer trends and accelerating decarbonization strategies drive this shift to a customer-centric energy future.

These new trends include the flexibility of DER to balance renewables’ variability while protecting reliability and cost, as well as proactive customers who are also producing electricity, known as prosumers. This is what the next generation of energy companies looks like.

Time-Of-Use Rates

Time-of-use rates are a common way to make electricity bills more accurate for residential consumers. They encourage energy efficiency and reduce energy consumption during peak demand to help offset the cost of power generation at those times. While these rates can be confusing, they are a form of a more sustainable future for the utility industry.

Most homes and businesses have an electric meter that measures the amount of energy consumed. Utilities use this information to create a monthly bill. When time-of-use rates are introduced, these meters will be set to charge higher rates during certain designated times of the day. These rates are based on the costs of electricity production, which rise and fall throughout the day depending on supply and demand.

By shifting energy use to off-peak hours, consumers can save money on their bills and help the environment by reducing the need for additional power plants during these peak usage times. However, to take advantage of these rates, customers must be willing and able to change their energy habits.

The energy landscape is changing quickly, and traditional utilities must change. They must offer new consumer-focused products, services, and technology and focus on personalization to stay relevant in the market. This includes embracing new customer engagement platforms beyond simple sign-in websites and location apps to provide personalized experiences for their consumers.

Energy Storage

The electric power grid operates based on a delicate balance between electricity supply and demand. Energy storage can help to balance this imbalance through the collection and storage of surplus electricity generation and the release of that energy to the grid during times of lower production or higher demand. This can lead to economic, reliability, and environmental benefits.

Energy storage technology is advancing rapidly, and new longer-duration batteries are enabling more affordable deployment of renewables. Additionally, the residential, commercial, and industrial (C&I) sector are increasing their installations of energy storage systems. In Q1 of 2018, residential battery storage installations even surpassed utility-scale deployments.

As these trends continue, it is clear that traditional utilities are facing significant challenges. However, they also have an opportunity to reinvent themselves and become leaders in the next era of energy.

To successfully transform themselves, these electricity companies in Houston must develop innovative digital businesses that offer a wide range of new services. This will include leveraging advanced technologies like artificial intelligence and machine learning to understand the behavior of consumers and their interactions with their energy systems. It will also require developing a robust commercialization process and go-to-market strategy that allows them to scale their solutions quickly. It will also involve engaging with their customers to create a personalized and customer-centric energy experience.

Demand Response

Providing commercial, industrial, and residential customers with reliable energy around the clock requires that utilities monitor trends in their service territories and work to match available power generation capacity with peak demand. This is known as demand response. In heat waves, for example, to meet the extra needs of their systems, utilities may ask electricity consumers to turn back on air-conditioning thermostats during peak hours – a process called load shedding. This flattens energy demand and often results in customers earning money through demand response programs that allow them to sell their unused power into the wholesale markets. Without such programs, the grid operators would be forced to dispatch expensive and polluting auxiliary power plants to provide energy during periods of high demand.

Utilities can communicate these requests to their customers in several ways, from simple off-peak pricing (where electricity is cheaper during certain times of the day) to smart meters that can send explicit or implicit signals to users. Customers can adjust their power use by postponing appliances or switching to alternatives like solar panels and batteries.

Demand response is a vital part of any modern energy supply chain. It helps to reduce energy consumption and shift it away from peak demand periods – helping to ease the stress on the nation’s power system and keep electricity prices more affordable for consumers.

Energy Efficiency Programs

Many utilities have established energy efficiency (EE) and demand-side management (DSM) programs. These range from EE initiatives, like home weatherization or multifamily and small business direct install programs, to implementing DSM services focusing on customer engagement — for example, offering app-based learning thermostats and intelligent EV charging solutions. These DER solutions are often funded through on-bill payments from utility customers or direct consumer financing.

The proliferation of these technologies is changing the role of electric utilities. Residential consumers now use smart software and digitally-connected devices to take control of their energy consumption. In contrast, commercial consumers have become prosumers who consume and produce electricity through their buildings or vehicles. These trends are also driving the electrification of cars and the rise of distributed renewable generation, which can shift peak demand periods, causing significant operational changes for utilities.

Traditional energy companies must move beyond best practices and embrace convergence-driven problem-solving to address these challenges. They must anticipate future needs, identify issues, and craft solutions before consumers even realize a deficiency exists. They must accelerate their efforts to understand customers’ needs and expand direct consumer engagement and feedback capabilities. This will require them to transform from siloed, transaction-based businesses to integrated service providers fully aligned with the customer value proposition.