Pathways for Innovation
The Role of Pilots and Demonstrations in Reinventing the Utility Business Model
The rapid growth of distributed energy resources (DERs) and large-scale renewable energy is driving utilities to develop and test a wide range of new technologies, business models, and customer programs.
This report explores challenges to effective innovation at U.S. electric utilities, with a focus on pilot and demonstration projects. We offer recommendations for utilities, regulators, and DER technology providers to support more effective and meaningful electricity innovation.
Why This Matters
As energy efficiency and self-generation erode customer electricity demand, utilities must determine how to fund needed investment in the grid with declining sales volumes. The proliferation of third-party energy devices on the grid creates new uncertainty for utilities in grid operation, as they move away from a traditional model in which the utility controlled all grid assets. In this era, utilities must develop new capabilities to integrate these new devices and manage two-way flows of energy on local distribution grids. Making the transition to a DER-rich future requires piloting new approaches to operating the electricity system, to engaging customers, to working with third-party DER providers, and to the utility business model itself.