Faced with aging assets, rising operating costs, growing regulatory risks, and flat demand growth, utilities are challenged to remain competitive in an evolving energy market. The answer might be...
Reinventing the Grid
How to find a future that works.
to find an efficient solution. The challenge is for regulators to unshackle utilities so they can serve customers the way they need to be served.
The people that best understand specific requirements with respect to the electric system are the customers - stakeholders with facilities. They understand the cost of an outage or a power quality anomaly. They understand how they value or don't value renewables, and the value of electric service for the third shift vs. the first shift. In an efficient grid, they and their assets will become fully empowered, collaborating with the grid to achieve the outcomes they need.
Gallagher: We're at a very early stage where utilities are open to considering what needs to be done, but at the same time they're looking for a dialogue about the kinds of change that might be appropriate in the way utilities are compensated, the way utility incentives are structured, to make sure there are symmetrical incentives.
This dialogue is beginning. Parties are debating, proceedings have been initiated, and over the next couple of years we will gain a much clearer vision of where we're going with distribution utilities, at least in the near term.
Utilities won't embrace models that haven't been fully tested. This means much of the innovation must come from outside of utilities and the halls of regulation. Some of the most creative ideas are coming from communities, vendors, and other stakeholders. It's critical that we have open processes, with open dialogue that includes outside stakeholders, so that where competitive markets can provide services, they have an opportunity to do that.
1. Fortnightly might be attributed with coining the phrase "utility 2.0" when we used it on the cover of our August 2008 issue. See " Utility 2.0: Web technologies are transforming the utility-customer relationship ," August 2008.