The electric sector is at a pivotal point and transformational change is underway. The future of the Next Generation Utility is heavily influenced by factors outside of the utility’s control, but for utilities navigating the future, managing uncertainty and creating the right strategies are within their control. The successful utility of the future will fully consider policy, regulatory, economic and technological uncertainty, and appropriately adapt its business model to the benefit of its stakeholders (customers, shareholders, politicians and regulators). PA’s Next Generation Utility series focuses on providing practical advice to help utility executives seek new opportunities, address challenges and plan for a sustainable and profitable future.
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As regulatory reform in certain jurisdictions aims to overhaul the traditional utility business model, utilities across the United States are faced with major challenges in how they ensure cost recovery. In turn, traditional cost of service electric rate making is being impacted by a confluence of factors, including heavy capital expenditures to modernize the grid, declines in electricity demand, regulatory mandates to meet higher renewable energy targets, and increased customer-owned distributed generation.
Our webinar explored these and other trends driving the “new normal” of electric rate design across the US focusing specifically on how the Los Angeles Department of Water and Power (LADWP), the nation’s largest public water and power utility, took a collaborative approach to their recently approved rate case.
Watch our webinar on demand, moderated by Greentech Media, featuring expert insights from LADWP and PA Consulting Group.
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PA’s Next Generation Utility insights cover a wide range of energy topics, from FutureWorlds™ view of the energy business model of the future, to DynamicEnergy™, the future of the electricity system to provide you with practical guidance on becoming the Next Generation Utility. Read our latest insights here.
What will the Next Generation Utility look like in the next decade?
Around the world, the electric utilities industry is talking about how a number of factors will impact traditional business models for energy suppliers and network operators. These include low carbon, renewables, commodity prices, distributed energy resources, smart grid, customer engagement, shareholder value and workforce transformation. Despite the vast array of opinions, insights and information on the topic of the Next Generation Utility, there is still no clear answer as to what the business model will be or should look like in the next decade.
FutureWorlds™ helps businesses to remove the natural bias of probable futures, introduces the consideration of all possible futures and tackles uncertainties head-on to arrive at a view of a preferred future.
Leading-Edge Technology Evolution
The future of the electricity system - DynamicEnergy™
Unlike almost every other major development in the electric industry over the past 100 years, today’s changes are not coming from the top down, but rather from the bottom up – or perhaps from the edges in. For the electric grid, the edge consists of customers – the residential, commercial and industrial ‘accounts’, ‘loads’ or ‘ratepayers’ – who now have the opportunity to reduce costs and meet sustainability goals, participate in power markets and create more transparent and customised relationships with their energy providers.
In this report, we delve into this dynamic set of developments and suggest a new way of looking at the future of the electricity system – a paradigm we call DynamicEnergy™. This is an energy environment in which two-way transactions become the new normal.
Energy storage and the Next Generation Utility – a strategy guide for the future
Throughout the world, energy storage technologies are at a turning point. They are becoming more flexible, efficient and capable of reliably delivering energy to consumers as needed. They are also playing a pivotal role in the growth of renewable energy and distributed energy resources. If power utilities are to take advantage of this trend, they will require a cross-functional and well-defined enterprise strategy.
Our report examines all the major aspects of a utility’s storage deployment lifecycle, highlighting critical future impacts and suggested strategies across four functional utility groups.
Utility analytics: improving service, reducing cost and increasing reliability
Utility analytics can unlock the power of data by coordinating various forms of information across organisational departments, applications and databases. It is clear there are real benefits to be gained from analytics, but for utilities to maximise the advantage, they need to take a holistic approach that manages, analyses and visualises data across their organisation. This will allow them to understand which solutions will create the most value in the long term.
PA’s Utility Analytics Rapid Assessment and Deployment Methodology provides a proven approach to assessing, prioritising and effectively managing the development of utility analytics.
How wearable technologies can help utilities keep the lights on
Wearable technologies have huge potential to enhance the capabilities of the Next Generation Utility’s workforce, both in the field and in the office. They will allow workers to access a vast amount of information to help them do their jobs better, faster, more safely and at reduced cost. The impact of wearable technologies will be felt in four key areas: customer, efficiency, reliability and safety.
In this report, we take you through the trends that are driving utilities to adapt and transform to a digital world. It also outlines how each key area will benefit.
Innovation and the Next Generation Utility: Embracing the new energy ecosystem
Faced with rapidly-evolving markets and incentives, electric utilities today have an unprecedented opportunity to develop new, innovative ways of structuring their businesses.
In this paper, we explain how utilities will be better positioned to participate in the Dynamic Energy system if they focus on three key competencies: Business Model Innovation, Technology Innovation, and Cultural Innovation.
The benefits of taking this three-pronged approach to innovation are clear. Doing nothing will lead to further declines in revenue and a loss of market share to thirdparty energy providers. Developing an innovation strategy – either company-wide or within specific teams – means opening up entirely new business lines and service models that will enhance the utility’s reputation and grow earnings.
Regulatory foresight and the Next Generation Utility
Enhancing value amidst policy and technological uncertainty
The utility market and regulatory landscape is shifting, bringing new challenges and opportunities. It is still being decided how utilities will be compensated in a future that is increasingly composed of distributed energy resources and more active participation of customers and third parties. However, regulators are increasingly pushing forward market and regulatory reforms in support of these outcomes, which aim to more equitably balance shareholder and customer value.
Our latest report shows that regulatory foresight should be viewed as a strategy to embrace the future, thinking outside the box, and engage with regulators, customers and third-parties in new ways.
Delivering the Next Generation Utility customer experience
Technology is driving change in the utility sector faster today than it has since the advent of the industry more than a century ago. For utility customers – ranging from the largest corporations to individual households – new technologies are offering different ways to interact with their utility, from paying a bill to sourcing generation.
Many utilities have only just begun to transform the customer experience. However, a growing number of utilities no longer see their customers simply as ratepayers attached to a meter, but rather, as individuals with an array of preferences. In order to maintain their role as a trusted energy advisor, it will be necessary for utilities to gain a deeper understanding of customer preferences.
Our new report discusses a horizontal approach to each customer class – commercial, small business, municipal or residential – that requires an ongoing transformation, rather than a one-time pivot in business practices. By embarking on this transformation today, utilities will be well-positioned to increase their value to customers and shareholders.
The Nimble Utility: Creating the next generation workforce
Disruptive technologies and other transformative developments mean that growth opportunities are quickly emerging in every area of the market. Unfortunately, most utilities are stuck playing catch‑up. They are focused on issues of aging infrastructure, adopting interactive communication technologies, and attending to other asset-based activities.
In their resolute pursuit of technological improvements, utilities are missing out on a huge part of capitalizing on market opportunities: their people. Utilities must develop a more adept and agile workforce—one that not only maintains their company’s traditional piece of the pie, but also sets the table for a whole new menu of opportunities available in the transforming market. This is not going to be easy. Recent market trends indicate utilities face a real workforce challenge.
PA's new report shows that utilities will need to become nimble: they will need to align their operating model with their workforce capability model so they can continuously capture the right people with the right skills at the right moment, to unleash their talents.