Utility Business Models Are Adjusting To Distributed Energy Generation

by Parks Associates | Jul. 10, 2022

Utility programs designed to reduce residential energy consumption have been available for decades. However, consumer participation in these programs is very limited. Currently, only 19% of US internet households use a time-of-use (TOU) rate plan from their utility or energy provider. A lack of consumer awareness and lack of consumer engagement with energy consumption and conservation act as barriers to the adoption of these programs.

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Customers who invest in energy generation and storage solutions, including solar power generator panels and batteries, require energy management solutions. For this market segment, energy management solutions are critical for assessing energy production and usage to determine when it is best to consume, store, or send excess power back to the grid. Energy management solutions also help owners of distributed generation technologies assess whether the equipment is functioning optimally. This capability, when coupled with energy management solutions, maximizes the ROI on consumers’ investment in solar and storage solutions.

The high costs of solar and storage limit adoption. However, financing solutions provide a means for consumers in different regions of the country to obtain a cash-flow positive solar installation for no money down. Several other factors also indicate stronger solar adoption in the future:

  • For those customers that live in markets that have been restructured, having a plan that is more environmentally friendly is among the leading causes of switching electricity plans.
  • Energy from renewable sources is highly valued among consumers. Almost half of US internet households say they would prefer to live in a community that is powered by solar energy.

Utilities are working more aggressively to serve the energy management needs of consumers and businesses. New diverse revenue opportunities are in the future as the utility business model is adjusted to reflect the competition for distributed generation and stronger customer and partner relationships are critical to future success.

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 This is an excerpt from Parks Associates library of research. Thanks for reading our work and we love any comments you want to provide. For more information, contact any of our team, reach out to me, or visit our website at www.parksassociates.com.

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