Much of the discussion about transitioning to a net zero electric power system focuses on technology. This is understandable. The shift from a system dominated by large central station power plants powered by fossil fuels to one that is far more decentralized and decarbonized can only happen successfully with significant technological advances—everything from more efficient wind, solar, and energy storage to improved load and weather forecasts to grid support from bidirectional electric vehicle (EV) chargers.
It’s critical to continue to leverage research and development (R&D) to improve existing technologies and create valuable new ones. However, achieving 2050 net zero targets also demands significant utility business model innovation. The challenges and opportunities utilities face in adapting their existing business models to a rapidly changing energy landscape are significant and wide-ranging. Current utility business models depend on the regulatory environment companies operate in—some utilities are vertically integrated and function in highly regulated markets, while others operate in more competitive deregulated markets. Business models are also heavily influenced by utility types, which range from independent power producers to distribution or transmission utilities or vertically integrated firms.
EPRI recently completed an exhaustive analysis exploring future utility business models. Over the next year, EPRI will publish 12 white papers highlighting the challenges requiring utilities to evolve their business models and the opportunities that come from doing so. The papers also examine the factors that need to be assessed in making decisions to change business models and provide tools and guidance to help utilities make choices that maximize the opportunities and minimize the energy transition risks. The main purpose of the papers is to initiate discussion and debate among utility executives so that they can develop a business model strategy uniquely suited to their situation.