From defense to offense: EY report provides roadmap to help utilities thrive amid rise in distributed energy
New York, 24 April 2014
The rise in distributed energy in the US threatens the business model upon which the power and utility sector has been built, but a new report from EY provides a strategic approach to guide the sector through this fundamental transformation.
The report, From defense to offense: Distributed energy and the challenges of transformation in the utilities sector, asserts the power and utility industry must shift from its current defensive posture regarding distributed energy resources (DER) and instead go on the offensive and lead the revolution.
“The critical success factor for U.S. electric utilities will be changed behaviors. Utilities have to have the capabilities and the mindset that says, ‘we want to compete, not just defend the status quo,’” said Dean Maschoff, Executive Director, Ernst & Young LLP and one of the authors of the report.
Maschoff noted that the value for DER in the form of distributed solar PV systems has never been more attractive in the US, and utilities will increasingly feel the impact on profitability as customers adopt the new technology. There’s no “one size fits all” solution, but the EY report details five imperatives that utilities need to accomplish to survive and thrive:
- Position the utility to compete
- Utility leadership teams need to design and commit to a transformation roadmap that will create a more efficient and effective utility operating model, one that will be able to offer new products and services and compete against new entrants.
- Transform the grid
- As DER grows as a market force, the grid must evolve into a more distributed, digital and dynamic system that provides two-way communication between customer locations and the utility.
- Manage the transition
- Utilities need to take actions that seek, to the fullest extent possible, full cost recovery of legacy assets to recover investments made and costs incurred in a pre-DER world.
- Focus on the customer
- To maximize the benefits of a pro-DER strategy, utilities need to increase their customer knowledge and the range of their offerings.
- Innovate and accelerate
- Utilities should adopt a business model that can adapt to changing conditions – one that captures and provides value in connection with distributed energy.
Click here to download the paper.
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This news release has been issued by Ernst & Young LLP, a member firm of EY serving clients in the US.