State and Future of Power: Ted Walker



Fortnightly Magazine - June 15 2020

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?