Boston, MA, U.S.A. — (METERING.COM) — July 12, 2010 – To remain competitive in the future, U.S. utilities will need to provide cleaner, low carbon electricity while enabling customers to better manage and reduce their energy use – and achieving this will require significant changes to the traditional utility business model.
This is the key finding from a new report, “The 21st Century Electric Utility: Positioning for a Low-Carbon Future,” prepared by Navigant Consulting for Ceres, which examines major trends reshaping the electric power sector, and the implications for investors and utilities’ business strategies going forward.
“The economics of electric power generation in the U.S. are changing dramatically,” said Ceres president Mindy Lubber. “The traditional paradigm of building large fossil fuel power plants to sell ever-increasing amounts of electricity is fast becoming obsolete. New business models must include aggressive energy efficiency measures and delivery of cleaner, low carbon energy through renewable and smart grid technologies.”
The report finds that the key elements of a 21st century utility business model, in addition to maintaining highly efficient business operations and effectively managing capital, are:
- Managing carbon emissions “across the enterprise” and aligning those costs and risks with existing and foreseeable carbon-reduction scenarios
- Pursuing all cost effective energy efficiency
- Integrating cost effective renewable energy resources in the generation mix
- Incorporating smart grid technologies for consumer and environmental benefit, and
- Conducting robust and transparent resource planning.
The most successful utilities will likely be those that pursue this agenda aggressively, transparently, and across all aspects of the business, and they also are likely to reduce capital investment risk, the report says. On the other hand, utilities failing to effectively manage risk, including higher carbon exposure, may suffer greater financial impacts.