The energy world as we know it…

Much has been written (and I won’t repeat or regurgitate) about the changing landscape for the energy industry and how its mimicking what happened to the telecom industry decades ago. While I do agree that revolution (as opposed to evolution) is around the corner for utilities, I don’t think that their response has nor will be quite the same as that of the telecom industry.

In the case of the telcos, a seismic shift occurred as a result of drastic improvements in technologies such as cellular. No longer were phones attached to a wall, they were attached to your belt, bag, pocket or hand. The difference is highly consequential to the speed and method of shifting which will occur in the energy industry. The over 3000 utilities are so entrenched in a manner of doing business, and there has been no disruptive energy technology which has yet appeared to thunder-strike their MO. Rather, what we’ve seen is a gradual embracing of distributed power (ie. solar rooftops) which does mean the utility companies sell less power, yet has not wrenched from their control the ability to affect the transmission of that power to and from residences or commercial buildings. So the effective control remains with utilities, while their revenue streams are going to start seriously dwindling as the shifts continue from centralized power to distributed generation and storage. As they become aware of dwindling revenues, they will seek either to make up for them with new “fees” or some will actually innovate and develop new business models.

The challenge from a consumer perspective is that the “new energy” companies like Solar City and others have to fight hard for every new client against state legislation, utility intervention and old-style ignorance. They are succeeding, as we see by the increased penetration, yet not at the rate which was so mind-blowing with telcos, that many entrenched providers disappeared or were consolidated. One could argue that having 3000 utilities is a good thing in America, as it creates lots of opportunity for new business models to emerge. That would be true if they were innovators. Utilities are traditionally “reactors” who will change when they must, not because they are forward-thinking. They set their rates, ensure they have sufficient energy, do some maintenance, repairs after storms or accidents, and go to sleep just fine every night. Its a rather mundane existence which they are quite happy to keep living.

It will take a disruptive technology to make it so that utilities are forced to evolve at the same rate as telcos did. Right now, I don’t see that force emerging until someone like Elon Musk drastically cuts the cost of storage or a new technology makes it to prime time. So for the moment, we must continue to bear down and keep the yardstick moving forward, as slow as it may seem for some of us. There will come a day when we can choose our power provider, or even become it completely. It could be Google Power, Apple Power, Virgin Mobile Power or a host of new brands that come onto the scene and who know how to treat a customer right. And when that happens, even the word “utility” won’t be relevant any longer.