Business case for DER and utility

Climate and energy are critical, massive, and complex issues.  Whatever we talk about, it will be just a small piece of the overall puzzle and, by definition, unbalanced.  This post collects some tidbits that point to an underlying trend, focusing on the most commonly asked question “is there a business case for smart grid?” This trend suggests an indispensable role for distribution utility of the future.

Accelerating pace of DER (distributed energy resources)

I’m pleasantly surprised by the NYT report today (Dec 1, 2014) that one of the world’s largest investor-owned electric utilities, E.On of Germany, has decided to split itself into two, one focusing on the less (!) risky business of renewables and distribution, and the other on the more risky conventional generation business of coal, nuclear and natural gas.   “We are seeing the emergence of two distinct energy worlds,” E.On’s CEO said.  In case you think this is an irrational impulsive move, a financial analyst estimated that of E.On’s 9.3 billion euro in pretax profits in 2013, more than half came from the greener, more predictable businesses. The utility industry has entered a period of disequilibrium in recent years, contemplating how best to leverage emerging technologies and evolve their business models (we will return to this point below).  Initial response to E.On’s decision: its share price rose about 5% today.  E.On said it will present a plan in 2016 to spin off most of the unit that currently holds the conventional generation.

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