Report: Utilities struggle to find new business models

Dive Brief:

  • Developing new business models is the utility industry's top challenge, a new survey finds, amid massive changes in how energy is produced and delivered.
  • A lack of clarity in environmental policies, as well as the rapid rise of distributed generation (DG), are also trouble spots for the industry, according to DNV GL.
  • Last year distributed generation topped the list of utility challenges, but the firm said the rapid rise of interconnection policies has made it less of a concern.

Dive Insight:

The evolution of the utility industry can, in a way, be viewed by the biggest concerns. Last year it was distributed generation, but according to research from DNV GL the speed with which states have developed interconnection policies have helped assuage those issues. Now, utilities are struggling with how to make money.

"Findings reveal stakeholders across the energy spectrum are looking to redefine business models,” Jessica Harrison, lead author of the report, said in a statement. “Interconnection of DG — which ranked first in 2014 — likely moved down the list of top challenges because interconnection standards are quickly adapting,  and federal and state policies have moved to revise rules to clarify storage interconnection and fast-track DG.”  

The 2014 survey showed the industry taking a proactive approach towards DG and evolving policy around energy and the environment, the firm said. And that "optimism persists," DNV GL writes. More than 40% of survey respondants said they plan a proactive strategy towards the DG space. And more than half said they plan to adopt new technology to improve operations or increase earnings.

Particularly, energy storage will gain traction by 2020 the report found. Just over half of survey respondents indicating they plan to provide storage-related products or services by 2020. But the report also finds utilities are taking on more defensive stargies.

“The percentage of respondents taking a defensive strategy towards new entrants in retail gas and electric supply increased from 3 percent to 13 percent. Likewise, the percentage doing so with DG increased from 12 percent to 20 percent,” the report concluded.

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