Two comparative incidents from history can tell us a great deal about how energy utilities have adapted to survive.
One looks at the relative expense of power delivery by Austin Energy today and Cambridge Energy in 1923. Records show that both charged average customers about 8.5 cents per kilowatt hour.
“Today you’re encouraged to use less energy; then you were encouraged to use more,” Eversource Energy’s Tilak Subramanian, vice president of energy efficiency, said during the Wednesday keynote of the CLEAResult Energy Forum in Austin, Texas.
“You can’t accomplish this without a whole lot of innovation,” he noted. “How do you keep prices so low for 93 years?”
The second example showing the survival challenges faced by utilities is at the Massachusetts Institute of Technology, the Boston-based Nirvana of all things scientific. MIT has added about 1.5 million square feet to its campus in recent years—yet overall energy demand has stayed flat.
“Most of that space is Life Science lab space, the most high-energy intensive space there is,” Subramanian marveled.
So Eversource Energy, as provider for 3.5 million customers in New England, has been forced to change its business model dramatically, he noted. The company now spends about $500 million annual on energy efficiency efforts, finding ways to monetize things like energy audits, weatherization, performance incentives and other things that try to make more from less.
All companies have to change course, CLEAResult CEO Aziz Virani said in his conference opening keynote. Utilities are facing headwinds such as changing customer preferences, an aging workforce, declining load growth, the rise of distributed generation from rooftop solar and even new market competitors outside the historical boundaries.
Google and Nest, for instance, are challenging the utility monopoly on energy management and services. This brings up questions that keep executives awake at night.
“Is it Google or Nest or me, the utility company, that the customer trusts?” Virani noted.
The key to success is building customer engagement, making the customer a partner in these decisions. Energy efficiency, for instance, is focused on collaboration, such as walking a homeowner through their audit and offering incentives that get them to upgrade HVAC units, insulation or other outcomes.
Those headwinds can turned into tailwinds, Virani said. Utilities can find ways to monetize needs such as grid modernization, energy management services and new directions for generation such as community solar and wind.
Getting close to the customer and understanding them, whether it’s a large commercial operation or a millennial startup wanting to save the world, can help utilities strengthen their future.
“When you talk about the utility of the future being more customer centric, energy efficiency is front and center with that,” Eversource Energy’s Subramanian said.
The CLEAResult Energy Forum continues through Thursday at the AT&T Executive Education and Conference Center in Austin.