A new report from Deloitte, its fourth annual resources study, says the writing is on the wall for the conventional utility: It’s time for change.
Consumers are embracing energy efficiency and alternative energy, businesses are going for onsite generation, and the Generation Y set is warming up to smart energy apps, says the report, among other things.
What does it all mean for utilities? It’s time to change, says Marlene Motyka, Deloitte US alternative energy leader.
“It’s an interesting time in the energy industry and utility industry,” she says. “There’s greater support for alternative energy from the consumer side of things, and consumers and businesses have been focused on reducing their energy consumption, which has impacted the utilities.”
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Meanwhile, utilities’ demand is flat or declining, while their costs are increasing due to the need to provide reliability and meet smart grid, renewable portfolio and other requirements.
“Utilities will have a hard time pushing through higher costs to customers. Customers are looking for alternatives,” she says.
The report found, among other things, that:
- Thirty-two percent of Generation Y consumers definitely/probably will buy a smart energy app, up from 28% in 2011.
- Nearly 62% of Generation Y consumers would buy a smart energy app with a $75 rebate on a $175 purchase price.
- Forty-four percent of businesses say they generate some portion of their electricity supply onsite, up from 33% in 2013. Healthcare and technology and media and telecommunications industries are the top onsite generators.
- Eighty-three percent of households took steps to reduce their energy bills last year.
Utilities need to focus more on what the customers want, she says. That might include offering residential customers new technology to better manage their energy or provide more distributed generation.
And we should start seeing change soon, beginning in the regions where utilities are feeling the biggest pinch.
“Our prediction is that there will be change and it will happen first in the northeast region of the US and also California and Hawaii,” says Motyka. “We looked at what’s happening in those states in terms of demand, policy and regulation. They have the largest decline in sales, the highest level of distributed generation and highest levels of energy efficiency investment.”
Let’s follow those regions to see what happens next. How quickly will the utilities innovate, how will they do it–and will it make customers happy?
