Rethinking The Electric Utility Business Model
Electric utilities must make changes to their business models to serve new economic and policy objectives.
In order to make these changes, according to the Rocky Mountain Institute (RMI), utilities must answer two fundamental questions:
- What functions will electric utilities perform in the future?
- What is the appropriate utility size and earnings?
RIM indicates that there are two possible business models that can answer these questions:
- Expand the monopoly business model with electric utility ownership or financing of all new assets and services including DERs, or
- Transform the platform operator, where electric utility serves as a neutral asset integrator and host for market activity.
None of these business models can answer the fundamental questions. To balance the limitations of the business models and adapt them to the circumstances of particular regions and objectives, There are four hybrid options to transform the current markets (RIM):
- Utility procurement of third-party solutions
- Split roles by-product or scope of activity
- Utility competition with third parties
- Utility hosted microplatforms
TEG will work with electric utilities and regulators to build the future energy markets that will establish profitable market structures and improve customer values.
- offer important insights to electric utility top management for use in interpreting regulatory energy policies
- assist in technical analyses to establish and support electric utility’s guiding visions and principles
- make compelling cases supported by facts for important policy decision-making for utilities
TEG also performs Power Market Analysis for our clients.