Utility Business Model Manoeuvrability
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- Nov 4, 2019 8:31 pm GMT
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After traveling in a straight-line for miles, at a steady speed, how quickly can a large ship make a sudden turn? There is an equation for ‘turning ability’ but can only be achieved with the right formula. Utility companies have a unique position in the market. What other businesses are obligated to continue services regardless of customer payment status? Where else can you find tiered pricing systems that consider average usage, time of day and location? What other businesses carry the obligation of safety, resiliency and accuracy while operating with 100 year-old equipment? These aspects put utility companies in a rare and peculiar position. They are under constant fire to perform perfectly, 100% of the time, while being urged to innovate operations. What's the best formula? An article in Forbes last week, entitled ‘It's Time The Energy Market Had Its Lightbulb Moment,’ stressed that ‘energy’ itself isn’t bad - it’s simply the sources we’ve traditionally used that can be harmful. The article pointed to democratizing energy as a business model solution. The experts at Power Ledger are hard at work to innovate energy and just might create the lightbulb moment mentioned above. The team at this startup is comprised of some of the world’s leading energy and blockchain experts, hoping to create a world powered by renewable energy. Are utilities ready for drastic reform? Is it ultimately necessary to ward off municipalization attempts? A year ago, a previous Forbes article fired the warning shot informing utilities it was time to make dramatic changes to their business models. Simply put, new responsibilities under yesterday’s business model can no longer accommodate policymakers or customers. Utilities are held under a microscope regarding environmental performance, resilience, expanded choice, and innovation. Suggested changes include adjusting cost-of-service, leveling the playing field, retiring uneconomical assets and re-imagining the utility business model to improve resiliency and infrastructure.
Despite the obvious difficulty of maneuvering a giant and well established company quickly, recent coal plant closures and renewable energy investments prove utilities are up for the challenge. It should be said that it takes time to alter course and there is inevitably some speed lost. But if veering about an object or obstruction is necssary to avoid disaster then it's well worth the cost. What utility business model reforms have you seen? What further changes do you think will soon come into play?