To Infinity & Beyond: The Utility of the Future
What will the Utility of the Future look like? Is it a utility that leverages artificial intelligence and IoT technologies to optimize its services and operations? Will utilities espouse a new business model, one driven by customer experience and consumer choice? Or perhaps the most successful utilities will simply be those that become nimble and flexible enough to face rapidly changing market dynamics? It is difficult to know precisely what will define the water and electric utilities of the future, but one thing is certain – the first step in this evolution will be a willingness to view impending 21st century changes as opportunities as opposed to obstacles.
We have begun to see some of these opportunities already take shape. One of the most significant of these developments is the unraveling of the traditional utility business model. Because a utility’s core responsibility is to deliver safe and reliable service at a reasonable cost, the utility-customer relationship has historically been uni-directional in nature. The advent of new technologies however, has created a more competitive marketplace and driven changes in customer behavior and preference. Customers have begun to expect greater control over their usage and sources of water and electricity. Additionally, these technologies have enabled ways for them to begin being not just consumers but producers, through the generation of their own resources (i.e., behind-the-meter photovoltaic, onsite water reuse, etc.). To continue to meet their ever-evolving needs, expectations, and capabilities, the emerging business model for the Utility of the Future will inevitably need to strengthen and build on the different touch points between the utility, the customer, and infrastructure.
With dramatic transformation already underway in the water and electric sectors, utilities must determine how to quickly and effectively adapt to change. Looking ahead, we’ve identified several opportunities to help water and electric utilities better prepare themselves to be the Utility of the Future.
Advanced Metering Infrastructure
AMI technology will be an essential tool for the Utility of the Future. Not only does AMI provide greater system visibility, resiliency, reliability, and security, it also offers real-time monitoring and two-way communication for encouraging broader customer water and energy savings. Although AMI deployment has seen a stronger start in the energy sector, adoption rates with water utilities have also picked up in recent years.
Decentralized Water & Energy Resources
The Utility of the Future will no doubt embrace the diversification of water and energy supplies. We’re already seeing the proliferation of distributed energy resources (DERs) - i.e. solar PV, wind, electric vehicles, battery storage, smart thermostats - support a more flexible and efficient electric grid. In the water sector, we’re also observing the expansion of onsite water reuse, rainwater harvesting, and smart water conservation technologies, in both the residential and commercial sectors. As a holistic and integrated approach to resource management and delivery, DERs and alternative water sources can help utilities ensure system-wide resiliency despite mounting demand and cost pressures. At the same time, they can also empower customers with more choice and control. The ‘Resources-as-a-Service’ business model will help the Utility of the Future realize the unique roles that they (along with their customers) will play in the evolving water and energy sectors.
Responsive Regulatory Framework
The Utility of the Future must continue to provide service, establish rates, and recoup revenue, while also responding to a climate of evolving trends that will require innovation. In the face of such developments as growing load defection due to DERs or the the greater adoption of decentralized water supplies, the Utility of the Future will only thrive if a utility rate design is able to address and adapt to the full complexity of these dynamics. Performance-based regulation has been recognized as one potential solution to some of these challenges. This rate model utilizes strong performance incentives and multi-year rate plans to drive more nimble innovation.