Decarbonization has emerged as one of the defining utility trends of the decade. In fact, over the past three years, more than 20 utilities in the United States have announced they’ll supply their customers with carbon-free or net-zero-carbon energy by 2050, with some making commitments to do so as early as 2035. At the same time, states and municipalities are making a similar push with 455 U.S. cities expressing support for emissions reductions and more than 25 percent of those establishing formal reduction targets.
The economics of energy generation are also moving in favor of renewables while trends in customer demand further inspire a transition to clean energy. On the residential side, an E Source market research study of 30,000 customers across the US found that 65 percent of customers want their utilities to provide more power from renewable sources. Similarly, on the commercial side, 234 of the world’s most influential companies have pledged through RE100 to source 100 percent of their energy consumption from renewable electricity in the shortest possible timeline — or by 2050 at the latest.
With so much momentum driving the decarbonization movement, it is a force that utilities must not only recognize but also evaluate as part of their overall long-term strategy.
At the same time, the global COVID-19 pandemic is impacting decarbonization commitments just as it has every other aspect of business. According to Essie Snell, Senior Manager of Customer Energy Solutions at E Source, while the majority of utilities are taking a wait-and-see approach, some are doubling down and accelerating their efforts. Snell suggests that utilities would be well-served to approach decarbonization during the pandemic in three phases: near-term, mid-term and longer term.
Near Term: Focus on Customer Service and Engagement
Challenging times present a unique opportunity to improve customer service and deepen customer engagement. Investments in cultivating a two-way dialogue with customers and increasing their satisfaction will pay big dividends when it comes to advancing the behavior change and technology required to achieve decarbonization goals, including driving EV and solar adoption, increasing participation in TOU rate plans and more, which remains essential during COVID-19 as utility commitments for 2020 and beyond remain in place.
Today, customers need to hear from their utilities with offers of assistance as they face new lifestyle and economic realities. Now is also the time for utilities to to invest in programs that help low income and other vulnerable communities, such as community solar, and to establish partnerships with trade allies as a means to collaboratively support local communities.
Promoting low-hanging electrification measures and offering virtual inspections to optimize energy usage is also a means to demonstrate a utility’s commitment to helping customers save. Personalized alerts can pinpoint how customers can achieve meaningful savings during cash-strapped times and avoid high bills while also helping achieve decarbonization goals.
Empathy, understanding and action steps to lend a hand will translate into greater customer engagement and participation down the road.
Midterm: Prepare for Recovery
Most utilities will need to adapt previously defined decarbonization business cases to align with COVID-19 recovery priorities. With record-high unemployment and grim economic forecasts, utilities would be well served to fine tune their decarbonization rationale to include metrics like: job creation and job security; air quality (given that poor air quality contributed to COVID infection); social equity; localization of distributed generation resources; and the importance of local investments to save small and medium-sized businesses.
Planning ahead for eventual stimulus funding is also an important midterm step. Though post-pandemic stimulus program design remains a significant unknown, past stimulus packages provide insight as to what activities are likely to be prioritized, including job creation, catalyzing energy innovation, grid modernization, and the advancement of solar, electric vehicles and energy storage. With these likely areas of focus in mind, there are hundreds of different scenarios through which stimulus funds could be leveraged to advance decarbonization. Working with legislators and regulators on stimulus program design increases the likelihood that decarbonization initiatives can benefit from the investment dollars that are ultimately made available.
The business transformation we are experiencing now is not a temporary state, but rather a new normal. The pandemic has served as a catalyst that is accelerating changes that in many cases were already underway, such as the move toward digitalization and preference for virtual tools to maintain and improve customer engagement and service delivery. Embracing this worldwide evolution today will translate into an ability for utilities to survive and scale tomorrow.
The time is now to establish post-pandemic strategies in order to be able to roll out programs as quickly as possible once stimulus funding is announced. This includes preparing to staff up, aligning with key partners and identifying potential platforms today to avoid resource-related slow downs when business resumes and competition for talent and technical solutions across industries and around the world will be at an all time high.
It’s also wise to detail execution requirements for shovel-ready programs, including workforce training and development and community engagement in order to hit the ground running as soon as things open back up.
Longer Term: Putting Funding to Work
Once stimulus package priorities are revealed and funds become available, utilities who have invested in advance planning during the mid-term phase will be best positioned to put funds to work immediately to advance technology and construction projects that benefit decarbonization commitments. Utilities that are in a position to “flip the switch” to fast-track a digitalization, virtual operations and deployment of solar and energy storage projects, for example, will have greater resilience than those that don’t.
Throughout this phase, ongoing collaboration with community, city and state officials, solutions providers and other partners will remain essential.
Today and Tomorrow: A Customer-Centric and Equitable Approach
In every phase from now through recovery, keeping customers top of mind as you plan for the future ramp up is an imperative. Given the potential in the current energy environment for disintermediation, customer-centricity should serve as the foundation for utility programs across the board. Understanding customer viewpoints and how to best meet their needs enables utilities to become a long-term energy partner and advisor, not merely a service provider. Such customer insight also makes it possible to deliver the sort of hyper-personalized communications and recommendations that help customers better understand and manage their energy use, which in turn improves customer satisfaction and loyalty, and ultimately protects mind share as new energy solutions become available.
Prioritizing an equitable shift to a low-carbon future across the entirety of a service population is also important. Any increase in energy prices will dramatically affect most customers. In fact, research from Google Nest found that 1 in 4 U.S. households spends 20 to 50 percent of its monthly income on energy. COVID-19 job losses and other economic changes are increasing these numbers, making it more critical than ever before to minimize risks to low- and moderate-income customers as part of new program roll outs.
A Partner at Every Stage
Bidgely’s UtilityAI™ platform empowers utilities with the customer engagement tools required in the near term, the enterprise analytics to inform planning in the midterm, and proven technology and rapid implementation capabilities essential in the longer term. Perhaps most importantly, Bidgely’s solutions are built with customer-centricity and equitable access to energy at their core. Together, this expertise yields progress toward decarbonization through this period of rapid change in the energy space and the world, as well as long into the future.