How can utilities survive distributed energy? Ernst & Young says it knows

A new report from Ernst & Young offers a high-level view of the steps utilities should take to prepare for widespread distributed generation. Although long on strategy and short on tactics, the report does cover five important areas every utility should be thinking about. And I certainly agree with the report's overall approach – namely, that utilities should switch from defense to offense. Brief summary below, or download the full report.  – Jesse Berst

 

The electric power industry is in the early days of the transformation driven by distributed energy resources – in particular rooftop solar photovoltaics. Many predict the tipping point will arrive in 2020.

 

The current one-way power flow will become multidirectional, with many consumers also becoming producers of power.

 

Flexibility is the key to surviving or even thriving in this new era. Utilities must be ready to move quickly to gain competitive advantage. Ernst & Young utilities says should transform their business models by building upon the following five imperatives:

 

 

 

1.     Position the utility to compete. Design a transformation roadmap to offer new products and services that compete against new entrants.

2.     Transform the grid. Provides two-way communication between customer locations and the utility.

3.     Manage the transition. Seek full cost recovery of legacy assets to recover investments made and costs incurred in a pre-DER world.

4.     Focus on the customer. Increase customer knowledge and your range of offerings.

5.     Innovate and accelerate. Adopt a business model that can adapt to changing conditions.

 

Utilities need to move from fighting this transformation to leading it.