Navigant Research Blog

Utilities Need an Innovation Reset

Neil Strother — November 28, 2016

SmartCityUtilities should take a cue from customers: Go ahead and innovate. That is the clear conclusion from a recent study that says consumers want their utilities to be more innovative and expand offerings into the home.

The study, a SmartEnergy IP survey of 1,500 US customers, finds 32% of respondents expect their utilities to adopt technologies that automate energy savings and 20% expect their utilities to build smarter communities. There is a downside in the data, however; nearly 40% of respondents do not view their utilities as innovative, meaning there is room for improvement.

Not all utilities lack for innovation. At Navigant Research, we have chronicled the efforts of utilities willing to pioneer new technologies for customers. For example, Green Mountain Power in Vermont has led the charge with its eHome program, a holistic approach to home energy management that leverages technologies such as heat pumps, solar PV, storage, and EV charging, as noted in our IoT Enabled Managed Services report. Other utilities like Sacramento Municipal Utility District, Oklahoma Gas & Electric, and Kansas City Power & Light are promoting the adoption of smart thermostats as a way of helping customers reduce their bills and promote overall grid efficiency.

Among utilities innovating within their communities, San Diego Gas & Electric stands out for its efforts to create smarter cities from an energy perspective. The Southern California utility, a subsidiary of Sempra Energy, has been collaborating with local city governments on projects that leverage smart meters, demand management, and energy efficiency to lessen the impact of changing load patterns. By working together, the utility and local cities have forged an integrated approach for smarter energy use. Similarly, Duke Energy and ComEd are two other broad-thinking utilities that are leveraging ties with the cities of Charlotte, North Carolina and Chicago, Illinois to foster the same type of smarter community.

While these examples are encouraging, the SmartEnergy IP survey indicates customers in many locations have not seen much innovation from their utilities. Nearly a third are saying that it’s okay to step beyond the normal bounds and offer new products and services that help customers save money and use energy more wisely. There is a message here for regulators as well: customers are ready for innovation, and new rules that enable utilities to expand their product and service offerings would be welcome. It’s time for an innovation reset for utilities.

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