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How Is the Energy Sector Changing and What Does the Future Hold for Electric Utilities?

By: , Posted on: March 25, 2016

Future of utilities

In his new book, longtime energy sector expert Dr. Fereidoon Sioshansi asks this question to a team of seasoned academics and industry-based professionals. Their answers, and the questions that follow from them, form the basis of The Future of Utilities: Utilities of the Future.

The experts in the field examine the implications of new energy generation and storage technologies, distributed generation and energy efficiency for traditional players in the energy sector. They also explore the role played by innovation, policy, regulation and pricing models, and present their well-informed view of how the energy sector will reshape itself going forward. Dr. Sioshansi shares his insights for how his new book will help guide the ongoing discussion that has been mobilizing so many different stakeholders.

What is the motivation for the book?

The electric power industry is rapidly and fundamentally changing on a number of dimensions, including generation, transmission, distribution and most important on the customer end.

While the pace of change has accelerated along the industry’s long value chain, it is most pronounced in distributed energy resources or DERs – which includes energy efficiency improvements plus distributed generation, particularly from rooftop solar PVs.

The former allows consumers to use less; the latter allows them to generate more of what they need. Combined, they are turning an increasing number of consumers into prosumers, eroding utility sales and revenues and threatening the historical business model, which was based on fixed tariffs applied to volumetric consumption.

Add energy storage into the equation, where costs are projected to be rapidly falling, and the new buzz word becomes “prosumage,” that is consumers who have become prosumers, who will increasingly be able to store some of the excess generation.

What is in store for traditional utilities?

For the first time in the history of the electric power sector, consumers in high retail tariff regions are able to meet most, if not all of their service needs through self-generation at costs that are on par or lower than the grid-supplied electricity, a phenomenon that is likely to spread as the cost of distributed solar generation continues to fall while the cost of grid-supplied electricity is projected to rise.

Equally important are rapid technological advances in energy storage, electric vehicles, micro-grids, intelligent home energy management, demand aggregation, and demand response, all pointing to a different future with a different role for the incumbent stakeholders in the power sector, particularly for the distribution business.

Many experts believe that these developments will disrupt the historical utility business model just as mobile phones, Uber and Airbnb have disrupted phone, taxi and the hospitality industries by offering more convenient services at lower costs.

What topics does this book cover?

Divided into three parts, the book’s 22 chapters examine the impact of new technologies on traditional utility business model, providing divergent perspectives from experts, scholars and academics from the US, Europe and Australia where the impact of DERs are already pronounced.

The contributing authors examine different aspects of the problem and offer their ideas and proposals for how the incumbents can best deal with the impending changes. The books coverage is comprehensive and exhaustive including technology, regulatory aspects, tariffs, rate design, business models and implementation strategies.

About the Editor

Dr. Sioshansi is President of Menlo Energy Economics, a consulting firm based in San Francisco and the editor and publisher of EEnergy Informer, a monthly newsletter with international circulation.

His professional experience includes Southern California Edison Company (SCE), the Electric Power Research Institute (EPRI), National Economic Research Associates (NERA), and Global Energy Decisions, now part of ABB.

He has edited 8 books since 2006, including:

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