Consumer engagement and energy management platforms dominated demand response trends in 2017, and will continue to do so in 2018.
Aggregating distributed energy resources has also been a long-term goal for utilities and developers, and this is the year where it could take off. Harnessing data from consumers and digitizing operations is emerging as a key trend for utilities as well.
Utility Dive asked experts to highlight what they thought would be the top trends for 2018 — here are their forecasts.
1. Utilities see competition from consumer-facing products — Adrian Tuck, CEO of Tendril
Long warned and fast approaching, utilities can expect a jolt from competition in 2018. We’re seeing new players in the ecosystem, including the smart home entrants. But 2018 is the year of truly disruptive retail energy providers. Nimble and forward-thinking retailers will break the mold with all-digital offerings, laser-focused data analytics, DERs bundled with smart home applications and advanced software that manages supply risk and reduces customer turnover.
Utilities are putting more focus on the customer, but this isn’t happening fast enough to evolve with ever-changing customer preferences and needs. The utility’s mission to provide safe, reliable and affordable service, coupled with the ecosystem of investors, regulators and employees, prevents utilities from moving quickly. This entire ecosystem will be forced to accelerate product development and increase offerings to customers with the quickly approaching, disruptive competition from retailers.
Tendril continues to recommend that utilities take swift steps to prepare for a new era of competition and heightened customer expectations. We believe that utilities should utilize demand supply management budgets to test innovative customer-centric offers. Utilities benefit from engaging with experienced, leading-edge partners and investing in advanced analytics platforms. We are confident that our recommendations will improve business outcomes today and help utilities adapt and transform for the disruption of tomorrow.
These changes aren’t unexpected, but the pace of change brought on by competitors will be.
2. It’s the year of the electric vehicle — AEE Matt Stanberry, vice president of market development
At AEE, we expect 2018 to be the Year of the EV. Sales of plug-in electric vehicles (EVs) have grown at a compound rate above 50 percent annually since 2011, and more rapid growth is expected even as the numbers pile up.
GM, with its Chevy Bolt, and Tesla, with its Model 3, have opened a mass market in passenger EVs, and with battery costs – the major barrier to purchase price competitiveness – dropping rapidly, all major automakers have plans to introduce a full range of models. Companies like BYD and Proterra are selling heavy-duty EV buses to transit systems and port facilities around the country and UPS has pre-ordered 125 electric Semi tractors from Tesla.
A real leap in EV adoption is likely to come from corporate fleets, where savings in total cost of ownership complement sustainability commitments. When it comes to charging infrastructure, more than a dozen states saw some sort of legislative or regulatory action in 2017, and momentum is building for more this year, fueled in some cases by VW settlement funds. One state to watch is Michigan, the home of the U.S. auto industry, where the Public Service Commission opened an EV docket in 2017, and proposals for utility pilots in infrastructure deployment are expected early in the new year.
3. Milliennials take over — Patty Durand, CEO of Smart Energy Consumer Collaborative
Everyone knows that the energy industry is undergoing significant change, especially toward a greater focus on the consume. Millennials surpassed baby boomers in 2016 as the largest segment of U.S. consumers (according to the Pew Research Center), and they are bringing radically different interests and perspectives to their relationships with their electricity providers than previous generations.
For example, millennials are far more likely to express interest in energy usage reports, app-based savings suggestions, prepaid billing and energy usage tracking than previous generations. Across the board they’re also far more interested in community solar, electric vehicles, energy storage, smart appliances and the smart home concept than the baby boomer generation.
Millennials also want their utilities to invest heavily in smart grid infrastructure upgrades and renewable energy generation (even if it means they have to pay more), and compared to older generations, they’re more willing to jump ship if their current utility doesn’t meet their needs.
These digital natives are used to having a vibrant marketplace for technology and access to 24x7 information. Millennials are ready for better, more digital and more green-friendly programs and services from their utilities. They want sustainability and clean energy. They want information and engagement with their energy provider and will drive vast changes in the utility marketplace in order to get their wants and needs met.
4. Residential customers control more energy — Sue Kelly, CEO of American Public Power Association.
In 2018, the retail customers of electric utilities will continue to adopt new ways of living and using electricity. Residential customers will increasingly use technology to control their electric usage. More industrial and commercial customers will demand clean energy supplies to meet corporate sustainability goals.
Many utilities will see flat or even declining load growth because of increased energy efficiency and demand response. Even if their customer counts increase, their loads may not. But on the flip side, electricity consumption could increase due to new uses such as transportation and even heating. We have to be ready for both scenarios.
Community-owned, not-for-profit public power utilities are well-positioned to respond to these changes, as we are answerable to our communities and not to remote shareholders. But we need to capitalize on our strengths. We can no longer stay in our comfort zone on our side of the meter — providing basic electric service and sending bills. We must diversify the menu, develop new rate designs to handle increased demands on our distribution grids, adapt to changing customer preferences, and prove we can be our customers’ trusted energy advisors.
As for what will keep me up at night in 2018, it will be cyber and physical security concerns. These threats will loom ever larger and no utility, large or small, will be immune. We in the electric utility industry will have to work even more closely with each other, our government partners, and other industry sectors to mitigate our risks and recover quickly if we do experience an event. We are making improvements to stay a step ahead of our adversaries, but we cannot underestimate their ever-expanding capabilities.
5. DER aggregation revs up — Jon Wellinghoff, former chairman of the Federal Energy Regulatory Commission.
In 2018, developers will begin to aggregate distributed energy resources (DERs- distributed generation, demand response, storage, control management systems etc.) to provide multiple grid services and collect revenue from multiple value streams.
We are seeing several prospective opportunities in California. East Bay Clean Energy (a community choice aggregation agency in Alameda County) and PG&E announced the West Oakland Clean Energy Project. There aggregated DERs will provide transmission services that would otherwise be provided by a new conventional 230 kV transmission line.
The California PUC announced over 700 MW of DER aggregation opportunity to substitute for three RMR (CASIO Reliability Must Run) power plants the CPUC wants shut down due to expense of keeping those plants operational to meet reliability needs only several hours of the year. Aggregation of DERs can supply that need while also realizing additional revenue opportunities during other hours of the year when the need is not there.
So aggregated DERs will institute a transformation where such resources, both in front of and behind the meter, will provide not only energy, capacity, and ancillary services, but transmission services as well. And get paid for each discreet service offering, making aggregated DERs truly the most cost effective “all purpose tool” on the grid.