The electricity value chain is undergoing extraordinary changes as it modernizes into the Smart Grid. At a recent series of Smart Grid workshops hosted by the California Public Utilities Commission, one utility speaker noted that the majority of transformations will occur at the consumption side of the electricity value chain. I agree. Consumption is starting to be viewed very differently in the USA. Whether it is consideration of the carbon footprint of that carrot purchased at the grocery store or the source of the electrons flowing into a socket, more consumers are becoming more mindful of how, when, why and what they consume.
What are the consumer pains that will motivate them to invest in painkilling innovations? (As noted in this article, successful new products or services have to be painkillers or vitamins. As a painkiller, an innovation has to resolve a pain for its target audience. If it’s a vitamin, an innovative product or service has to improve an existing situation.)
Pain comes in the form of prices for fuel. Consumers show remarkable awareness of the price of gasoline. As gas prices continue to rise, more consumers will discover the many painkilling qualities of electric vehicles (EVs) and plugin hybrid EVs (PHEVs). The equivalent of a full “tank” of electric charge will be pennies/kW as opposed to dollars/gallon. And as EVs have a completely different motor than internal combustion engines, they may have less downtime for maintenance and repairs. The total cost of ownership (TCO) looks very attractive when you factor in annual “fueling” costs and maintenance. Car manufacturers are rolling out new models with prices that fit a broader range of consumer budgets. The Plug In America website offers a list of all EVs and PHEVs that are available. For the gloomy naysayers who insist that these cars are still too expensive or that consumers won’t buy because of range anxiety, I have 3 words: Solar technology trends. We’ve seen dramatic increases in solar energy harvesting technologies coupled with equally dramatic decreases in production costs, creating an energetic market expansion at a speed that seemed unthinkable three years ago. Gamechanging breakthroughs in battery technologies and intense competition among manufacturers will similarly drive down EV costs while increasing driving ranges.
EVs are also painkillers for two other important stakeholders in the electricity value chain – governments and utilities. Read about government and utility painkillers for the reasons why. What’s not to love about EVs?
For consumers, pain also comes in the form of their electricity bills. Energy efficiency measures ranging from improving building envelopes with better insulation to Home Energy Management Systems (HEMS) can help consumers reduce their electricity bills. However, distributed generation or DG will be the ultimate collection of painkilling innovations. Whether the electricity is produced on consumer rooftops or discharged from their EVs, these distributed sources of generation will earn money for their owners, and offset their electricity bills. Distributed generation is also a painkiller for utilities because it helps improve reliability, and because it often relies on domestic renewable sources of energy, DG is also a painkiller for governments.
DG is the painkilling change agent that causes the most profound of transformations in the electricity value chain. Consumers can shift to becoming prosumers. A term coined by Alvin Toffler, prosumers are consumers as well as producers of electricity. DG and EVs give us the capacity to become electricity producers as well as consumers, but this transformation relies to a great extent on policy innovations like decoupling and finance innovations that bring these technologies to the masses. And as prosumers – aka ratepayers, taxpayers, and voters – we should make sure that utilities and governments are encouraging the rapid deployment of these painkillers.