Ted Walker is a partner in Guidehouse’s global Energy, Sustainability, and Infrastructure segment. He has over 20 years’ experience working with and for premier energy companies delivering strategic and transformative results to his clients. Ted is focused on innovation and growth opportunities and the changing role of the utility in the evolving energy ecosystem. He is an involved leader who is comfortable at every level of an engagement from the operations floor to the C-Suite. He has authored and contributed to several thought leadership pieces analyzing various aspects of the utilities industry.
We all hear of “as a service” offerings across many other industries. What does this mean for utilities? What does energy as a service look like?
At its core, energy as a service (EaaS) is about selling tangible value and outcomes versus selling something intangible like kilowatt-hours or kilowatts. Traditionally, the utility business model focuses on selling (including generating and delivering) a commodity input fuel (electricity).
The EaaS business model is a shift away from selling the input commodity to expanding the value chain and bundling the commodity input with the end use application or outcome a customer seeks to achieve. This will result in a more comprehensive and differentiated product and service bundle to customers.
To truly customize an EaaS solution to a customer, a few simple questions can be used that focus on outcomes:
What degree of reliability/resiliency (how many 9s of reliability?) do you need for a certain application? This will trigger things like distributed generation/storage and financing;
How much autonomy and control do you want? This would trigger how much control the utility would have on peak demand response triggers;
How decarbonized do you want your generation source to be? This would unlock the development of a truly optimized solution that might include a combination of reduced carbon grid-based generation, more energy efficiency investments, electrification, and demand flexibility;
What is your budget? This would trigger bundling of financial instruments and guaranteed customer savings options.
Fast-forward a decade where we live in a fully Internet of Things-enabled world where each load consuming device will have the capability to precisely measure and control its energy usage. In this world, would a utility still only be selling commodity kilowatt-hours?
The bottom line is that EaaS solutions allow utilities to better meet the intrinsic needs of their customers — cost reductions, improved supply quality, higher sustainability, improved use of technology, and simplified operations — while better aligning its revenue streams with underlying cost drivers.
PUF posed a baker's dozen questions about power's future to a similar number of the thought leaders at Guidehouse:
- Dan Hahn — You have a short elevator ride alone with the CEO of a major utility. What would you want to tell him or her?
- Karin Corfee — What major changes have we seen over the last year to the key opportunities and threats utilities are facing? What can utilities do to be better prepared for these changes?
- Erik Larson — Are utilities well-equipped for next generation Energy Cloud business models? What is your view on the industry's readiness? What can utilities do now to be ready?
- Dan Bradley — How will utilities' relationships with their customers change over the next decade? How can utilities get ahead of this?
- Ted Walker — We all hear of "as a service" offerings across many other industries. What does this mean for utilities? What does energy as a service look like?
- Shannon Graham — How are European energy companies positioning themselves in a quickly decarbonizing market? What lessons can be learned from them for U.S. utilities?
- Derek Jones — Approximately one-third of energy use in the U.S. is for transportation. How can utilities tap into this market in a significant way?
- David O'Brien — What are the major regulatory changes you see in the next decade? What is needed from regulators to optimize outcomes for all stakeholders?
- Margot Everett — What are the major changes to how utilities should approach rate design over the next decade to deal with challenging industry dynamics?
- Michelle Fay — What will the utility of the future look like in 2030? How will it be different from today's utility?
- Rick Rodman — How has risk management changed for utilities? What can utilities learn from other industries?
- Jenny Hampton — How can utilities use design thinking to develop game-changing innovations? What lessons can be learned from other industries?
- Danielle Vitoff — What role can utilities take in their customers' quest to decarbonize? How have we seen utilities shifting more decarbonization choices to their clients?