First Principles that Lead to the Disruption of the Energy Utility
Customer defection is coming by 2026.
Assumption 1: It will be more and more common for energy users to opt-out of the traditional service from the local utility monopoly.
- The solar and battery cost curves are lowering at predictable declines, following a consumer product cost-curve.
- Buying on-sight solar and energy storage will shift from being an altruistic choice to being a cost-effective choice.
- The first-movers to purchasing their own solar and battery storage will be those with access to space and low cost financing (residential and commercial property owners).
Assumption 2: The amount of customer defection will be proportional to the value of a local utility’s service compared to the perceived value of alternate options.
- Utilities will need to develop clever ways to price electricity service and bundle with other energy services.
- Utilities will need to expand products to “help you use energy”. Programs to that create recommender systems, inform high/abnormal usage, and even helpful setup and control of various devices will need mass expansion.
- Utilities must develop a ‘clean’ rates/programs that are an competitive with on-site generation. Utilities won’t be able to market ‘cheap coal’ vs. expensive solar when solar is cheap too. Utilities need to develop renewable and storage programs that are win-win. Many current programs (utility buybacks, net metering, etc) are usually beneficial to either the customer or the utility, rarely both.