Published on February 5, 2014
Customer Driven Business Model Evolution Paul De Martini October 1, 2012 © 2012, Newport Consulting Group
EEI Future Scenarios 60 industry experts agree on disrupted end state – question is pace and timing Base Case: The transformation takes place, but the pace is slower, since utilities have neither policy incentives nor strong market demand. Economic Growth Base Case Rapid Deployment Policy Influence Policy Driven Market Driven Market Driven: Progress is limited to areas the market can pull forward without incentives, mandates or subsidies. Conditions are chaotic, with policies, regulations and standards varying widely by region. Policy Driven: Federal and state legislation and regulation creates powerful incentives and mandates. Utilities find themselves pinched as policymakers push changes without providing the money to pay for them. Rapid Development: Most disruptive and unpredictable scenario. The confusion of an Internet-style frenzy is counterbalanced somewhat by standards and guidelines from policymakers and regulators. Utilities have the most opportunities in this scenario…but also the most risks. Source: EEI Smart Technology Scenario Workshops
5 Forces Driving Transformation Signposts point to different experiences and pace of change across US Rapid Deployment Policy Driven Market Driven Base Case
Policy is Spurring DER Adoption Combined with accelerating improvements in DER technology price & performance are creating opportunities for electric system efficiencies 2011 US State Renewable Policy Source: EIA 2010 US State EE Policy Source: ACEEE Over 80% of US population under the equivalent of EU’s 20/20/20 Plan 4
DER will exceed Coal Gen Capacity by 2020 New economies of scale & potential network effects driving business opportunities Solar PV system installed in US every 7 minutes in 2012 Source: SEIA/GTM Research
Customer Evolution Linking Smart Grid with Web 2.0 Enables Customer Partnerships Customer In Control Green Button Customer In Context Customer Collaboration Customer Co-creation Zero Net Energy 6
Evolving Energy Ecosystem Convergence of Four Key Networks
Central to Distributed Transition Fundamental shift for industry business and operational paradigms Distributed Gen Energy Storage Electric Network + Central Gen Responsive Demand
Customer-Grid Evolution Business opportunities exist on both sides of the evolution curve, but require new methods to be successful – this isn’t déjà vu circa 1997 or DR aggregation or Texas
3° of Value in Electric Industry Opportunities are expanding beyond traditional value chain creating value networks – need to look beyond the zero sum game of traditional value chain 10
1° DER Values & Differentiated Services 27+ potential values, only a handful can be effectively monetized today
Market Facilitator: Energy eBay + PayPal Opportunity to create distributed market platform with related market services to enable millions of participants and billions of transactions
Customer Energy Solution: Salesforce.com Focus on managing customer energy related processes to achieve business/lifestyle integration
Conceptual View of Customer Energy Related Transactions Occurring Today Across 3°
Business Model Framework Business model decisions require deeper thinking than what spot on the continuum looks interesting – platforms, control points, revenue models & core capabilities are all critical elements
Telecom Lesson: BAU is not a good strategy Telecom growth from new services – basic voice service losing money 16
DER Growth will BAU is not a good strategy Telecom Lesson:disrupt distribution model
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