Three ‘power plays’ for utilities seeking growth.
As managing director for utilities strategy at Accenture, Greg Bolino works with clients to use digital capabilities to transform the business, adopt new business models, and drive value from smart grid investments.
The business model of the traditional utility company is breaking down - but in different ways for individual utilities. Ironically, however, this may be a good thing for the industry, as it may help to point the way forward. Otherwise, if utilities should try to adhere to their current ways of doing things, they would likely find it difficult to meet objectives for growth.
Utilities today face a wide range of factors that stand in the way of continued growth, stemming mostly from new technologies. In our own research last year, we found that 61 percent of utility executives globally believe distributed generation will have a negative effect on revenues, up from 43 percent the previous year. Even more startling, 60 percent of those surveyed said they believe the much-dreaded industry "death spiral" of significant demand disruption will occur within the next 10 years.
We have identified a handful of major threats eroding the typical utility business model:
Reductions in Demand. We see a 15-percent potential reduction in demand by 2025, stemming from rapidly evolving energy technologies.
Competition from New Players. The industry resembles an evolving ecosystem, with new business models and partnering opportunities arising daily. For example, 90 percent of executives believe competition will increase for beyond the meter services in the next five years.