First Principles that Lead to the Disruption of the Energy Utility

Customer defection is coming by 2026.

Ben Dickson

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Jul 17, 2020

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Assumption 1: It will be more and more common for energy users to opt-out of the traditional service from the local utility monopoly.

1. The solar and battery cost curves are lowering at predictable declines, following a consumer product cost-curve.
2. Buying on-sight solar and energy storage will shift from being an altruistic choice to being a cost-effective choice.
3. 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.

1. Utilities will need to develop clever ways to price electricity service and bundle with other energy services.
2. 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.
3. 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.