As 100 Percent Renewables Become the New Norm, a New Role for Utilities Emerges

Portland, Ore., is one of the most recent municipalities to join dozens of cities and states across the U.S. in pledges to run on 100 percent renewable energy in the coming decades. Portland is taking a two-step approach toward its goal: first, the city and county in which it’s located have committed to work with energy utilities Portland General Electric (PGE) and Pacific Power to shift the electricity portfolio to renewable sources by 2035; second, it will eliminate all direct fossil fuel use, such as vehicle fuels, natural gas and home heating oil.

While Portland prides itself on being environmentally conscious, more and more government leaders across the country are introducing similarly aggressive measures — from Midwestern cities such as Chicago and Madison, Wis., to San Diego and the state of Hawaii.

A similar movement is happening at the corporate level. Leaders of some of the nation’s biggest companies are adopting 100 percent renewable purchasing initiatives. Leaders include Walmart, Nike, Nestle, Salesforce, Microsoft and Facebook, among many others, and are all part of the global Renewable Energy 100 Initiative. Per RE100’s 2016 annual report, the 90 companies in the program were, on average, already halfway to reaching their goal. Salesforce even accomplished its aim to achieve net zero carbon emissions across its global footprint by 2050, a whopping 33 years earlier than anticipated. Now that’s some serious momentum.

Wind and solar are among the most popular renewable energy sources, and companies are putting significant dollars behind adopting and expanding these programs. Wind has blown its way to the top of the list of renewables with record growth in 2016, according to the American Wind Energy Association (AWEA). The growth is due in part to large-scale corporate initiatives such as General Motor’s (GM) wind-powered Arlington, TX assembly plant and 7-Eleven’s plan to power most of its Texas stores with wind energy beginning in 2018. Joining the likes of GM and 7-Eleven, as well as Facebook and Home Depot in wind energy investments, Apple recently announced that a soon-to-be-built wind farm in Oregon will power one of its data centers, which is located about 130 miles away. This is Apple’s largest renewable energy investment to date.

Given government organizations and corporations make up most of a utility’s customer base — business customers make up more than 50 percent of typical utility revenues — the shift to renewable energy sources has prompted utilities to expand the services they offer their business customers. In order to meet evolving customer needs, such as helping business customers procure large amounts of renewable energy to replace fossil energy from the grid, utilities need to adapt to become trusted energy advisers and partners. Their knowledge of electricity purchasing makes them the best positioned — and in some cases, the only suitable partner — to take on this new challenge.

Customers don’t just appreciate personalized and custom energy services; they expect them. Accenture recently found that 92 percent of energy consumers would be more satisfied with their energy provider if they personalized their communications and engagement. As more energy sourcing options become available, business customers need expert guidance in order to cut through the clutter of what’s the current trend to what’s best for their individual business.

With customers making their demands heard loud and clear, utilities are being forced into new territory — and, in some cases, are being pushed back onto their heels. According to a recent Navigant study, 52 percent of utility executives name increasing customer satisfaction and Net Promoter scores (NPS) as their top customer service business goal, but confidence in their own ability to deliver on this goal is low, ranging from six percent to 24 percent. While utilities may still be working on solutions for emerging customer needs, the reality is that existing tools, put to work more effectively, could put them closer than they think.

Utilities have a tremendous tool in the form of years of energy use data. Together with deep data analytics — correlated with data on temperature, sun and wind patterns — these are tools utilities can use to help customers better understand their energy options, and identify which solutions are the best fit for their specific needs.

This data-driven capability can be especially valuable, for instance, as utilities field more and more questions from customers about clean and renewable energy options. With demand increasing for new solutions, utilities have an opportunity to take a proactive role in their customers’ energy planning by providing a full portfolio of options tailored to specific and well-understood historical energy usage.

The result can be a win-win for both customer and utility. With guidance from utilities, the customer can end up with a better portfolio of energy resources than it would select on its own. The utility, in turn, can limit customer defections and increase satisfaction, while gaining greater insight into decisions that directly affect system resource planning and reliability.

Taking a cue from PGE, Pacific Power and the City of Portland, utilities should seize the opportunity to work closely with their customers and use data to ease the transition from fossil fuels to cleaner energy. They can do this by leveraging their deep understanding of customers’ energy use to recommend the best and most cost-efficient ways to reach their sustainability goals.

Existing data and relationships with local businesses and governments puts utilities in prime position to deliver insights, educate and advise. If they commit to a deep level of customer engagement, they will cement their position as key partners for their customers as the energy landscape changes in the years and decades ahead.

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Indy is a technology executive focused on strategy, marketing and sales of new technologies.  Prior to joining FirstFuel, he was a Principal at The Boston Consulting Group, where he drove efforts to launch and grow businesses in energy, software, security and semiconductors with several Fortune 100 clients.  Through his work at BCG, Indy led teams that devised new technology strategies, developed IP portfolios, oversaw new acquisitions and re-aligned sales forces to optimize growth and capitalize new markets.  In addition, Indy has worked with a technology-based startup and a venture capital firm. Indy holds an MBA from Harvard Business School and a BS from the Massachusetts Institute of Technology.

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