New Business and Regulatory Models for Utilities of the Future

About the Project

The Utilities of the Future project focuses on how new technologies in distributed energy resources (DER) are transforming customer/provider relationships. Advances in distributed generation technologies and associated cost reductions are providing customers with potentially attractive alternatives to standard electric utility services, perhaps turning them into ‘prosumers’. Utilities around the world are re-evaluating their business models, and regulators are considering multiple market reforms. The project aims to develop analytical tools and techniques to help address the key market, regulatory and energy policy issues in a power sector with high penetration of DER.

Key Points

Technological advancements have the potential to disrupt the fundamentals of the electric power sector and to some extent make the current role of utilities obsolete. Many countries face this challenge but so far a generic business and regulatory model has yet to emerge that would resolve this issue. New technologies could result in two market altering outcomes, which the industry and regulators cannot ignore:

• First, the penetration of distributed energy resources (DER) could lead to policies becoming increasingly local and the power sector being more fragmented, both in its value chain and services traded. 
• Second, the value chain can be unbundled further by creating a platform, potentially operated by the utility, where new products and services are traded. 
• The challenge for regulators is to create functional markets, which can handle unbundled services, prevent technological lock-in and protect the vulnerable.