Energy startups can increase their chance of success by ensuring they
offer a profit incentive to utilities, John Rowe, former CEO and
chairman emeritus of Exelon said Wednesday in Chicago. “Utilities are very obstinate creatures,” Rowe said at the Energy
Thought Summit at Chicago’s Symphony Center. “We know how to say no, and
we know how to say yes and then not do anything. We’re very good at
inertia.
And the reason for that is not that we’re enduringly stupid.
Some of my favorite people run utilities. The reason is most
of these new ideas have no profit incentive in them for the utility at
all. We just do them because the regulators and politicians want them.
To us it’s just placating the Gods.” Before Rowe joined Exelon, he found a profit incentive for an energy
conservation program with New England Energy Company, and once it became
profitable, he said, there was no longer any problem
getting conservation done.
“And that’s true for almost everything you do. Think about what you
need. Think about what the end use customer needs. And think about what
the utility needs, if the utility is your intermediary, because if you
can’t do something that it needs economically, the odds are it will be a
very slow moving project.”
Other utility CEOs at the summit hinted at the kinds of innovations they need. “With prices dropping
for battery storage, ComEd CEO Anne Pramaggiore said she
sees opportunities for community-scale battery storage to keep the
lights on during outages. On the customer side, she said, there are even richer opportunities
for innovations that give customers information and control of their
energy use: “How do I manage my usage? How do I lower my bills? How do I
take control here?”
“We love to partner with these kinds of companies,” Pramaggiore said.
“We feel like we’re the marketplace, the enabler. We want to get that
out there for customers.” Utilities could get a lot smoother at dealing with customers,
said Kansas City Power and Light CEO Terry Bassham. Utilities find
themselves doing things they never expected to to do, things they may
not be particularly adept at, like reporting outages through social
media.
“That is different than what we’re used to dealing with and yet we’ve got to make sure we’re focused on that,” he said. “We don’t need more electrical engineers. For all the engineers in
the room, I love electrical engineers, don’t misunderstand me. But what
we need are human engineers. We need people who know how to communicate
with people, who know how to deal with people, how to work complicated
issues, complicated regulations and figure out good solutions.”
That doesn’t just mean employees, but also technologies that help utilities navigate a rapidly changing marketplace. “It’s the end of the world as we know it, and I’m excited about
that,” Bassham said. “I have never seen as many themes that are making a
basic change to how we do our industry.” As upbeat as Pramaggiore and Bassham sounded about opportunity, Rowe suggested startups could be more pragmatic about survival. “Here’s the thing. Out of all these various things that interact with
a utility, probably nine out of ten will disappear very shortly. And
the tenth one will get more important than the utility. The issue is
having any idea which are the nine and which is the tenth,” he said.
“The key message for those of you who are casting your personal
futures on this sort of thing is that your best chance of winning is if
you think of the utility’s needs as well as your own.”
http://www.forbes.com/sites/jeffmcmahon/2015/07/23/ceo-tip-for-energy-startups-make-utilities-money/2/?ss=energy
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