The sustainably-sourced guaranteed lower electricity bill is the true disruptive challenge confronting electric utilities and their regulators. Competitors are offering it. Utilities are not.
For example, customers in the approximately 10 states that currently enable economic net metering are buying solar systems through financial contracts that guarantee lower monthly utility bills. By 2016 the price of solar energy is projected to be equal to or even less than utility rates in all 50 states. The potential for customers to buy sustainably-sourced energy through contracts that guarantee lower monthly electricity bills could soon explode across the U.S.
The specific 21st-century disruptions confronting the electric utility industry include:
This 21st century business success formula contrasts with the traditional electric utility business model that too often is defined by annual rate increases, service interruptions and environmental impacts. The industry’s hallmark customer education programs and cash incentive promotions of energy-efficient technologies may be reaching a point of diminishing customer engagement. Customers question these programs and cash incentives when they fail to achieve sustained lower electricity bills as utility rates move higher. Utility cash incentive programs for energy-efficiency technologies or demand-response is losing competitiveness to customer-owned solutions that deliver sustainably-sourced guaranteed lower electricity bills.
This trend will only accelerate as customer-centric innovations merge to deliver the zero net energy (ZNE) building. ZNE buildings generate as much annual renewable energy as they consume through the design integration of onsite renewable energy, batteries, LED lighting, energy efficiency, collaborative living/work spaces, smart sensors and Internet-of-things management systems. The financial community is on track to introduce innovations that will finance ZNE buildings to deliver guaranteed lower electricity bills. California, the seventh largest economy in the world, has integrated ZNE into its building codes. Similar to what happened in solar, California will create consumer demand critical mass for ZNE. This will drive global manufacturing economies of scales that will move ZNE buildings to price competitiveness against traditional electric utility service.
The path to being weird begins with leadership and culture. Having worked with utilities and solar companies, I can confirm their cultures are as different as night and day. Succeeding solar companies have a singular focus on innovations that drive down the customer’s monthly bill. They are consumed with a search for marketing innovations that will win customers. They are in constant dialogue on acquisitions or alliances that hold the potential for cost-saving economies of scale, financing innovations, customer growth and expansion of product offerings.
To remain competitive and relevant the electric utility industry, and its regulators, will need to place their focus on the sustainably-sourced guaranteed lower monthly electricity bill. An industry focus on rate re-designs that preserve revenues plus programs to shape consumer behavior around the industry’s cost curve do not align with customer expectations. The sustainably-sourced guaranteed lower electricity bill is emerging as the consumer electricity procurement-metric of the 21st century.
To implement this new mojo, the industry will need to develop and/or acquire work associates capable of identifying and executing innovations that win customers. To communicate their new mojo, utilities will probably have to go through a humbling and frustrating learning curve to learn how to achieve interactive conversations with their customers via mobile social media. Their new mojo will inspire individual utilities to explore acquisitions and strategic alliances that enable the delivery of sustainably-sourced guaranteed lower electricity bills.
In summary: To win customers in the 21st century, the electric utility industry must get weird, or go outside its existing norms, in figuring out how to deliver a sustainably sourced guaranteed lower electricity bill.
Image credit: Flickr/Alan Levine
Bill Roth is a cleantech business pioneer having led teams that developed the first hydrogen fueled Prius and a utility scale, non-thermal solar power plant. Using his CEO and senior officer experiences, Roth has coached hundreds of CEOs and business owners on how to develop and implement projects that win customers and cut costs while reducing environmental impacts. As a professional economist, Roth has written numerous books including his best selling The Secret Green Sauce (available on Amazon) that profiles proven sustainable best practices in pricing, marketing and operations. His most recent book, The Boomer Generation Diet (available on Amazon) profiles his humorous personal story on how he used sustainable best practices to lose 40 pounds and still enjoy Happy Hour!