Navigant Research Blog

How Energy Transformation Investors Are Supporting New Utility Customer Solutions

— May 10, 2018

I recently highlighted how innovative utility customer solutions can have both customer benefits and utility value. Such customer-focused solutions in both the residential and commercial and industrial (C&I) sector are the focus of my new Utility Customer Solutions Research Service.

The Southern Company pilot effort I blogged about last month exhibits the kind of customer-focused thinking needed by vertically regulated utilities, retail energy choice brokers, energy service providers, and technology disruptors. But not all types of new behind-the-customer solutions can come from rate-based, approved pilot projects in the vertically regulated US. For these solutions to begin to scale, forward-thinking investment funds will play a key role in supporting solutions-based technology platform companies with the capital they need to take advantage of the distributed energy solutions being created by the Energy Cloud transformation.

Investment Activity Key to Transformation

By way of example, several of Southern Company’s recent technology investments and investment exits directly support the new residential utility customer solutions framework in my recent report as well as my C&I-focused Energy as a Service report. The following investment funds are playing key roles in this evolution:

  • Energy Impact Partners (EIP) is a utility investor partnership supported by Xcel Energy, National Grid, Southern Company, AGL Energy, and Alliant Energy, among others.
  • Constellation Technology Ventures (CTV), a subsidiary of Exelon, seeks to invest in energy technology companies at various stages of development to deploy the company’s products via Exelon’s commercial platform.
  • Shell Ventures seeks technology to help residential customers better manage their personal energy use and commercial opportunities to bring power to remote communities. The company invests in renewable power generation, distributed energy solutions, and energy storage solutions.

Key investment/divestiture examples from these three investors include:

  • EIP’s joint investment with Amazon’s Alexa Fund in ecobee, an integrated home energy/smart home company with smart thermostat, smart lighting, and smart sensor technology. This investment supports Navigant Research’s take that technology like ecobee’s, coupled with smart home technology like Alexa, will revolutionize the way people interact with their homes. It also will extend the role a smart home platform can play to support efficient home energy use.
  • CTV’s investment in Sparkfund, a company focused on a subscription-based energy efficiency technology deployment business model to deploy lighting, HVAC, building controls, and energy storage at C&I facilities. Sparkfund’s approach highlights the C&I customer’s need for energy as a service solutions without CAPEX.
  • Shell Ventures’ investment in Sense, a smart home-focused home energy disaggregation platform that enables customer smartphone visibility at the plug and device level. These types of platforms are poised to add depth to utility partners looking to engage with their customers with new, cutting-edge technologies for the home.

Tipping the Scales

Transformative change takes time and the scales never seem like they will tip until they do. Navigant Research believes that the scales will tip when utilities, energy services, technology providers, and investors focus first on the customer and what customer problems these new technologies can solve. EIP, CTV, and Shell Ventures are providing the support necessary to bring these solutions to the marketplace.


Integrated Ecosystem Partnerships Are Critical to Innovative Residential Customer Solutions

— March 29, 2018

My recent blog regarding Southern Company’s Smart Neighborhoods initiatives with Alabama Power and Georgia Power demonstrated that innovative customer solutions can have customer benefits as well as utility value. These types of customer-focused solutions in both the residential and commercial and industrial sectors are the focus of our new Utility Customer Solutions Research Service. Further, these Smart Neighborhoods initiatives are featured in my recently released Strategy Insight report titled Maximizing the Residential Energy Customer Experience with Emerging Solutions.

Smart Neighborhoods Initiative Taking Shape in Atlanta

Since that first blog release, Georgia Power has released details on the roles that individual technology providers are playing in the Atlanta initiative. These partner roles include:

  • focuses on smart home security solutions and can connect smart home devices to make them accessible through a smartphone app for homeowners.
  • GreenMarbles is a connected home systems integrator that is a channel provider for that specializing in home automation and energy management solutions that can manage homeowner’s thermostats, door locks, lights, garage doors, and water sensors.
  • Hannah Solar is a Georgia-based solar PV plus energy storage installer for residential, commercial, and agricultural sectors.
  • Mercedes-Benz Energy provides home energy solutions related to EV charging, solar PV and battery energy storage that can help provide resilient backup power.
  • Sunverge Energy has developed a distributed energy resources (DER) software and hardware controls platform that allows for the integration of solar PV, battery energy storage, and home energy management systems (HEMS) across multiple residences across a virtual power plant.

Sunverge Energy Helping to Find Savings for Customers

As part of the Atlanta Smart Neighborhoods program, Sunverge Energy’s platform will help customers by forecasting and scheduling residential activities to provide energy bill savings based on Georgia Power’s Smart Usage or Nights & Weekends energy rates. Further, Sunverge Energy’s platform will help Georgia Power and Southern Company understand how aggregated DER such as solar PV, battery energy storage, and HEMSs can interact across multiple residences to optimize the local grid.

Innovative Partnerships Will Transform the Role of the Home

Both regulated utilities and deregulated utility services companies are now exploring new energy-related solutions such as the DER optimization demonstrated by Georgia Power. Further, technology disruptors with smart home/home energy solutions are also looking to deploy their new solutions—either directly with customers or in partnerships with utilities—to make homes more safe, convenient, and comfortable. Navigant Research anticipates that an innovative ecosystem of partnerships between customers, utilities, and vendors will come together to expand the role a home can play in safety, convenience, comfort, and the transition of the grid from traditional, centralized generation to part of an Energy Cloud platform.


Regulated Utilities Deliver Innovative Home Construction Solutions

— March 15, 2018

In a recent blog, I discussed how a new virtual net metering product is saving residential customers money by going solar with no money down while also retaining customers and reducing sales overhead for the energy service provider. This kind of creative, customer-focused solution is the focus of my new Utility Customer Solutions Research Service.

Utilities Are Rolling out Creative Solutions

The announcement of the Southern Company Smart Neighborhoods initiatives with Alabama Power and Georgia Power is showing that creative customer solutions can have utility benefits within a regulated utility jurisdiction as well. These Smart Neighborhood initiatives are featured, among others, in my recently released Navigant Research Strategy Insight report on these solutions.

In Birmingham, Alabama Power is now providing distributed energy resources (DER) including solar PV and battery energy storage, as well as smart home appliances and technologies as part of a new home construction development. This initiative will also aggregate renewable generation and distributed energy storage at the neighborhood level through community scale storage, solar PV, and emergency distributed generation to optimize the local grid and improve resiliency.

In Atlanta, Georgia Power is also providing DER (rooftop solar PV and battery energy storage), enhanced home insulation, advanced HVAC units, and LED lighting, as well as home automation systems with smart thermostats, smart locks, and voice control technology as part of a new home construction development. The Georgia Power program will collect data from the DER, HVAC systems, heat pump water heaters, and other technologies to inform grid optimization and new services for customers.

What Should We Expect in the Evolving Market?

Navigant Research anticipates that both regulated utilities and deregulated energy service companies will be increasingly more focused on these new solutions and business models to meet new utility customer expectations. For deregulated energy services companies, the reason is quite simple—the sale of electricity in retail choice is being commoditized, which reduces margins. Therefore, the drive to deliver new services without customer expenditures under longer contracts and recurring revenue is obvious. And there are few regulatory barriers to doing so.

But regulated utilities face regulatory constraints on what the utility can do beside operate the grid and sell electricity to customers, making the path to new business models more difficult. However, these two Southern Company Smart Neighborhood initiatives are extending the role a home can play in transitioning the grid from traditional centralized generation to part of an Energy Cloud platform while also creating new residential customer solutions.


Innovative Residential Solar PV Offering Designed to Increase Customer Retention

— March 13, 2018

In July 2017, I highlighted how innovative UK residential solar PV plus energy storage products were being brought to the residential marketplace. These kinds of new, customer-focused solutions are at the heart of Navigant Research’s new Utility Customer Solutions Research Service, which is focused on new solutions and business models for utilities and technology companies to meet new utility customer expectations.

Residential utility customers in Texas are now seeing another innovative business model being rolled out to take advantage of Electric Reliability Council of Texas’ power market rules and intense solar irradiance. This new Texas solar business model will be featured, among others, in my upcoming Navigant Research report, Maximizing the Residential Energy Customer Experience with Emerging Solutions.

The Texas model is an example of how the emergence of distributed energy resources and software innovation can come together to meet customer needs. Navigant Research envisions that these types of business model innovations will become more common to meet the needs of the utility residential customers of the future.

A New Model for Consumer Agreements

Sunrun and Think Energy, Engie’s retail choice electricity and energy services provider in the US, have partnered to offer a unique financed residential solar PV product. Due to local grid rules, there are no consistent solar PV net-metering policies to reimburse customers or solar PV asset owners for excess solar PV power provided to the grid. However, Sunrun and Think Energy created a virtual net-metering credit that residential property owners can apply toward their electricity bill for exported power. This new model allows Sunrun and Think Energy to save the customer money while engaging with a customer for a long-term, 20-year solar PPA agreement, rather than the typical short-term retail choice electricity procurement contract.

Traditional retail electricity choice sales in deregulated electricity markets has increasingly become more like non-energy e-commerce transactions. Many e-commerce transactions with high customer acquisitions have well-documented challenges to remain profitable. Think Energy is partnering to save customers money by going solar with no out of pocket expenditures while reducing its own customer acquisition by keeping the customers it has under a long-term agreement. Sounds like a winning approach across the board.


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