The century-old business model of electric utilities today now must accommodate new technologies such as distributed energy resources and electric vehicles (EVs). More than 90 percent of respondents to the 2019 Utility Dive State of the Electric Utility survey, for example, expect distributed solar and storage to increase in their areas, and 96 percent foresee an increase in electric vehicles (EVs).
The fact is, both residential and commercial customers are looking at new and innovative ways to meet their energy needs, whether with self-generation, peer-to-peer energy trading or purchase power agreements (PPAs) for large commercial and industrial (C&I) accounts. And this means that utilities must up their game in pleasing energy consumers.
The importance of knowing customers and serving them well was the key point made by Andres Carvallo in a presentation at the 2019 AclaraConnect conference. Carvallo is a recognized smart grid expert, author and former chief information officer at Austin Energy, a role he managed when this utility was first in the U.S. to launch a fleshed-out, smart-grid deployment.
Being “a smarter enterprise” was the topic of Carvallo’s presentation, and he sees it as the key to surviving in the distributed energy world. Where should utilities start getting smarter? With customers, of course. Carvallo says you need to know them and understand the marketplace opportunities they face to keep them with you in coming years.
The buyer’s market
Given the monopolistic nature of the business, just who are a utility’s competitors? Carvallo cited competition from three directions:
Rooftop solar or the neighborhood “prosumer,” which is a consumer who produces energy
Bad regulation combined with utility complacency
Non-utility entities such as Wal-Mart or Amazon, that generate their own power
What’s more, consumers have become more discerning and demanding. They expect information about their accounts to be easily accessible and immediate response to problems.
But how many utilities have a native app that works on mobile devices that lets customers pay bills, shows them their consumption or lets them know there’s an outage back home, and restoration will be happening within four hours? That’s a question Carvallo tossed out to his largely utility-based audience at the Aclara conference. When only a handful of arms rose up from the crowd, Carvallo said, “Everybody should have that!”
He also pushed for social networking activity – and dedicated staff to manage it – as well as using analytics to generate personalized offers and jump on marketplace changes before they happen.
Honk if you love EVs
Carvallo was at Austin Energy when the utility aggressively invested in renewables and electrification, among other things. Today, the utility has some 800 charging stations situated around town and offers unlimited charging for fewer than $5 per month.
“Why did we do that?” he asked. “There are almost 20,000 electric vehicles in Austin.” Given the kilowatts needed to charge an EV, each one is akin to adding another household load to the system, Carvallo explained.
Commercial is big business
While residential customers are great – often making up 80 percent of a utility customer base – commercial accounts can bring in the big bucks, Carvallo noted. “We doubled revenues in eight years,” he said, adding that it was because the utility attracted more commercial and industrial business. A Samsung fabrication plant, for instance, is a 150-megawatt account for Austin Energy.
“How many of you have big customers like that?” he asked his audience. “You want to attract that customer, and in order to attract that customer, you’ve got to do a great job on your infrastructure, your delivery and your costs.”
In part, that means no outages, Carvallo continued. Austin Energy dropped is annual outage duration average from 80 minutes to 40 minutes between 2003 and 2010. As the company noted in its 2013 annual performance report, the industry average is 120 minutes of SAIDI per year.
Keep rates down
Despite the investment to gain these improvements, Carvallo said Austin Energy accomplished this without raising rates during that eight-year time frame and even managed to shrink head count by 500 people. This achievement was the payback for extensive upgrades, automation and training.
Keeping rates and outage numbers low is one reason Austin Energy has been able to attract big C&I accounts and operate with an enviable customer mix: 40 percent C&I, 60 percent residential. Carvallo says building commercial accounts should be a smarter utility’s game plan, and the smartest utilities recognize that competition extends well beyond the boundaries of their service territories. “You’re competing nationwide for a new Amazon center. It’s no longer your little region you’re competing with,” he said.
Finally, Carvallo told his audience it’s essential to keep an eye on the competition yet to come. For instance, two researchers in Australia have created paint with materials that absorb solar energy and then split ambient moisture into hydrogen and oxygen. The hydrogen can be collected and used as an energy source. There’s also a paint that creates heat from solar light.
Such technologies may be a little disconcerting for utility pros still wondering how to keep businesses strong in the face of more conventional DERs. But, Carvallo reminded his AclaraConnect audience that they’re in a great position to leverage emerging technologies.
“Energy is the center of the universe,” he said. “You are the masters of energy delivery. Take charge. Lead the way.”
Save the date for AclaraConnect 2020 in Nashville, TN and join us to for sessions and insights from leading thought leaders in the utility industry.