Distributed Energy: A Disruptive Force

Distributed Energy: A Disruptive Force

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Distributed Energy: A Disruptive Force

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    Distributed Energy as a Disruptive Force

    The growth of DE shows few signs of abating. It is being driven by improving economics derived from decreasing costs, customer choice, and innovations in technologies and business models. DE companies are spurring that innovation, and they will continue to embrace new products and services that will keep the competitive pressure on incumbent utilities.

    DE will thus continue to present challenges to utilities as it forces the fixed cost of the grid to be borne by shrinking revenues from traditional electricity generation and as it starts to disintermediate part of the utility value chain. Simply put, a potential competitive threat for traditional utilities now lurks in every neighborhood, in every home, and on every rooftop across the country.

    We believe utilities must be proactive in developing a response for a future defined by more DE. Being defensive or worrying about cannibalizing existing retail sales will not deter the underlying advantages of the DE companies’ business models, which will only strengthen in the future. Utilities can’t afford to ignore the long list of companies in other industries that discovered how a wait-and-see strategy could be fatal. Fortunately, utilities have many advantages that they can leverage in this emerging, more competitive environment, including low-cost customer access, control of the grid’s unique capabilities, and an established brand with customers.

    Distributive energy is a disruptive force. It will require an equally big disruption among utilities if they are going to survive and grow in the changing U.S. power environment.