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Choice is pushing the utilities industry into an era of customer consciousness

The energy consumer ain’t what he used to be. But, then again, neither is the energy industry. What used to be static is now constant flux. What used to be about infrastructure and hardware is now about customers and software.

The future isn’t now in our industry. The future was yesterday, and tomorrow is a whole other eon with a brand new energy consumer: one who is tech-savvy and questioning.

“Technologies are giving consumers different choices these days,” said Lawrence Orsini, CEO of LO3 Energy and a panelist at our upcoming Oracle Industry Connect conference in NYC this April.

To Orsini, that new consumer is why the industry is seeing all this change—or at least one of the main reasons.

“Consumers are driving this shift by recognizing that they have choice, which is what is starting to shift the existing paradigm,” he added. “We’ve been ratepayers; we’ve been obligated to pay what the utility decides and when the utility decides we should. Those days are coming to an end. People and communities are recognizing that, through tech, they have new options and new choices. They don’t want cheap; they don’t want free. They just want choice.”

But Orsini pointed out that, really, these changes have been seen before in other industries: retail, hospitality, even healthcare. But the most parallel evolution is likely telecom, where taking the phone off the wall changed the world.

The utilities industry is facing a similar shift; it’s just not about phones. It’s about meters.

“We’re going to take the meter off the wall and there will be different services and different choices and there will be new markets, and that new customer will be happy,” Orsini added.

When those new consumers meet that new market, the utilities industry won’t be solely about their traditional electricity, gas, water delivery businesses. Instead, there will be a new layer: services. And once everyone—from customers to utility execs to regulators—finally see the benefits of these services, that new eon of utilities will “take off like a rocket,” according to Orsini.

Those new markets to make for happier new consumers will likely have one interesting and innovative element at their core that Orsini, especially, is well-versed in: blockchain. (Full disclosure: Orsini and I have talked about blockchain before in my previous life as an industry editor. You can read our first discussion on the topic here.)

Orsini’s company is leading the Brooklyn Microgrid project, a peer-to-peer solar exchange built on blockchain that allows local residents to augment their own power (or buy, sell, trade extra energy to others). But, he warns that, despite its real potential, most of what we’re seeing around the industry these days is just hype.

While, yes, blockchain is revolutionary, it’s still new and still evolving. (And there still aren’t a lot of real uses for blockchain in the utilities industry in play just yet. The Brooklyn Microgrid is often cited as the only one really up and running in the U.S.)

“The real movement is aligned with accessing, securing and making permissible data,” he noted. “Putting a fake cryptocurrency in the middle of a transaction—between the producer and the consumer of a kilowatt hour—is selling snake oil. And you’ll know pretty quickly who’s selling that snake oil. They’re fresh, new MBAs walking into utility offices and saying, ‘We’re coming to change your business model,’ and you’ll think, ‘Kid, you don’t even understand my business model. You don’t know the business. You don’t know the industry. You don’t know the regulatory issues. And you don’t know how I make money.’”

Orsini estimates the blockchain hype around 60% of the chatter in the industry today, but he stressed that this will change. The hype will give way to reality, as that new eon of energy progresses. Despite his own group’s project in Brooklyn, however, he doesn’t think real cross-the-board, flip-the-switch change will happen in the U.S. first. He points to a country dealing with more immediate problems and needing more immediate solutions as the first point of change, especially in the areas where blockchain works best (transactive energy). And that country? Australia.

The U.S. timeframe Orsini envisions is about the seven-year mark from now when we see consumers really driving changes in regulation.

Until that time of real transactive change, though, there’s always the unique lessons from Orsini’s Brooklyn Microgrid and other programs opened up under the NY REV processes.

 “I’ve talked to regulators all over the globe,” he said. “They all have strong interest in what’s happening here. This regulatory evolution is slow, but it’s still head and shoulders above the rest.”

As we make that transition to more interactive, transactive energy, Orsini already has a list of lessons utilities can apply right now to make that move easier going forward:

  • Look to the grid-edge first, rather than focusing on the grid center.
  • Talk to regulators—and keep on talking—about changing the old thinking about capital and compensation.
  • Don’t be all in. You don’t need to own it all anymore. It’s time to invest in co-investment.

 

Learn more from Orsini at Oracle Industry Connect this April. Along with other New York state/REV players, he’ll dive deeper into the NY energy scene in our NY State of Energy panel session. Request an invitation to the conference right here.

 

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