The Smart Grid Threat You’re Not Worrying About (But Should Be)

If you make it past this introduction, many of you are going to decide you don't need to read the rest. "Above my pay grade," you will say to yourself. Or "not my job."

Yet if we fail to collectively grapple with this issue, you may not have the job and the salary you deserve. Better-paying jobs will go instead to people outside the utility space, competitors with new and better business models.

A Formula for Failure

The current utility business model is breaking down. Utilities are being asked to make massive investments in the Smart Grid. Yet the things the Smart Grid enables -- conservation, energy efficiency, demand response -- will reduce their sales.

Spend more to make less. Sound like a winner to you?

Others are Finding Formulas for Success

If the utility industry fails to come up with new business models, competitors from adjacent industries will do it for them. They won’t compete head-to-head. Instead, they will bite off the best morsels -- high-margin customers and businesses -- and leave the utilities with the low-margin, high-difficulty scraps. Reliability. Duty to serve. Universal access. Stranded assets.

EnerNOC is gnawing away at one juicy piece.  Google is circling the waters… Wal-Mart has plans… Verizon… Solar City… Schneider... Local power parks and microgrids… It’s a long list with new entrants every day.

What to Do About it Mow

Utility professionals must start discussing the new businesses they want to be in, piloting the best ideas, and seeking the regulatory approvals or changes that allow them a reasonable profit.

What new business would you like to be in? Where could your skills be applied to create new revenue streams? What policy changes will be needed to make that possible?

I can’t think of a better jumpstart for your thinking than Peter Fox-Penner’s Smart Grid business models article here at SGN. Read it. Discuss it with your colleagues. And start deciding which business model(s) you want to promote and support. You can’t stop the coming transformation. But you can be informed and intentional about the role you and your company should play.

You might also be interested in …

Smart Power Business Models for a Smarter Grid

Why Today's Utilities May Soon Be Obsolete (and What May Replace Them)

IBM – Switching Perspectives (pdf)

Capitalize on Tomorrow’s Smart Grid Opportunities with a Future-Friendly Data Management Framework

Should Utilities Shift Rate Structures – and Customer Communications – to Meet Industry Changes Like Distributed Generation?

Why Utilities and Regulators are Tussling Over Forward-looking Projections vs. Backward-looking Reporting

Smart Grid Strategies

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