Leaders and Laggards in the Race to Create the Utility of the Future

Highlighted Research | July 3, 2016

Electric utilities today are faced with unprecedented challenges, and their fundamental business model is at risk. The emergence of distributed generation (DG) has sparked a revolution in the power sector and poses an imminent threat to utilities, as customers generating their own power behind the utility’s meter erodes their primary revenue stream. Meanwhile, utilities are facing increasingly stringent renewables mandates, changing regulations, and an increasingly complex grid to manage – a perfect storm of challenges that demands a strong and rapid response. However, incumbent utilities have a rocky relationship with innovation, and attitudes range from denial, to obstructionism, to – in some cases – real creative adaptation.

Lux looked at the world’s 10 most important utilities, as well as five “wild card” – smaller utilities that offer timely lessons – and gave each a “utility of the future” progress score based on metrics like partnership, innovation, renewables, and corporate culture. Scores range from a mere 28% to 85% out of a perfect 100%, with European utilities leading the way. Expect increasing utilities to turn to venturing, and acquisitions to catch up, or maintain their lead, or fall prey to consolidation. For more, see the reports “Dinosaurs and Pioneers: Benchmarking Progress and Identifying New Opportunities for the Utility of the Future” and “Powering the Future: Evaluating the Contenders that Aim to Rule the Distributed Grid” (client registration required for both).

Utility reactions range from denial to adaptation, and European utilities have made more positive progress than their counterparts elsewhere in the world. These companies have taken a variety of different approaches to modernize and diversify, which this section details.

By: Cosmin Laslau, Katrina Westerhof