Recent Disruptions in the E&U Industry Call for a New Approach

North Highland recently sponsored and participated in the “Customer and Corporate Symposium” organized by the Western Energy Institute (WEI) in San Francisco. Over 100 professionals from utilities and industry suppliers across the West gathered to learn more about the new challenges that energy providers face today. Discussions focused on how utilities can best connect with customers in an industry with increasing disruption – we’re sharing with you two of the key the critical takeaways from the Conference.

Disruption is coming from all directions and it will not stop anytime soon:

The excitement around the dramatic uptake of green power in the U.S. signals a cultural shift and an overall change in perspective that feeds into the landscape of disruption. This new mainstream acceptance, along with the consistent reduction in the cost of renewables, is making renewable energy the power source of choice.

One of the significant drivers of disruption is the regulatory environment. Federal government and states are offering tax incentives for wind and solar energy. States are instituting Renewable Portfolio Standards that mandate that a certain percentage of power be sourced from renewables (29 states at last count with California and Hawaii mandating that in the future 100% of electricity be generated from green resources). At the same time, states like California, Oregon and Massachusetts are now adopting utility scale battery mandates.

New emerging technologies are also keeping utilities on their toes. Smart thermostats (with expected device sales to reach 14 million a year by 2021 across U.S. and Canada), home batteries, and access for residential rooftop solar have increasingly given consumers the power to manage their consumption.  These distributed devices and power sources offer an opportunity and a potential competitive threat for utilities – an opportunity for utilities to integrate these resources and better manage the grid, and a threat in the sense that the consumers have more choices of where they get their power. With this backdrop, utilities need to seek new talent with new skills, particularly in the digital realm as a connected two-way grid grows year-by-year.

Even as energy providers learn how to deal with each of these factors, new disruptors and opportunities are brewing in the background, so waiting for “things to settle” is not an option.

A customer-focused approach is a must:

The competitive environment requires utilities to re-think customer engagement strategies, if not develop them from scratch. Research presented at the conference showed that, by 2020, Customer Experience will be the key differentiator when choosing an energy provider, potentially more than price.

Utilities are having to think differently about their customers, beyond new service connections, outage management and billing management. Cross-pollination with industries such as consumer products, which has a wealth of knowledge and best practices in this space, will be critical to minimizing the risk of adapting to the changing environment while maximizing the time and money saved by leveraging lessons learned.

Adopting best practices to enrich customer segmentation, for example, can go a long way when it comes to capturing and retaining customers.

During the conference, Heather Mulligan of Puget Sound Energy presented the Washington-based utility’s development of their innovative renewable “green tariff” programs and how they are signing contracts with wind developers to serve corporate clients such as REI and Starbucks that are looking to source more and more of their power from renewables.

Other examples of innovative approaches that utilities are using in the new distributed energy world are to partner with solar providers, or develop their own community solar parks, to bring a renewable offering to their residential customers. Such a partnership-like approach may lead to a future where distribution utilities act as a hub in the center of the grid ecosystem.

Utilities are positioned to retain and capture new market opportunities if they are progressive with their products and ensure that their offerings are aligned with diverse customer segments and their needs. Those who don’t focus on closing the gap today, however, may be soon left behind.