Finding Opportunity in the Utility-Renewable Debate

Finding Opportunity in the Utility-Renewable Debate

By Joey Marquart and Michael McCullough

The rift between rooftop solar and electric utilities, once confined to industry debate, is now playing out before a mainstream U.S. audience. This is evidenced by Diane Cardwell’s detailed story on the solar net metering debate in The New York Times, and we can only expect more mainstream and business coverage of the topic as the renewable and utility industries continue to meet at a crossroads.

At Edelman, we see major opportunity for companies and organizations on both sides of the debate to demonstrate their vision for a more complex, interconnected future. As we’ve seen in our work, the business models of almost any company in the energy sector is in greater flux today than ever before. Utilities and solar companies are just two examples of stakeholders in this debate.

Both sides are missing critical opportunities to convince us they have plans to evolve – solar companies with fewer incentives and rapidly changing business models over time, and utilities in the dawning era of a resilient grid. Edelman’s Trust Barometer found that the second biggest reason people trust energy companies is based on proof those companies are innovating.

The utility industry is one of the oldest in the U.S. Its importance to the success of the nation can’t be understated. But broader industry change remains – especially as the power grid is modernized with new technologies and solutions – and this will likely cause heartburn in an industry deeply rooted in tradition. The elephant in the room is the fact that many utilities would prefer not to change the business model. That prevailing thought is one of the biggest challenges to establishing authentic trust with customers, and it is likely why you will see the public react negatively to defensive posturing.

Saying that, there is a tremendous opportunity for the utility industry to embrace this moment in time for the better. Our Trust Barometer tells us that “technology” is the most trusted industry. This is where the industry has an opportunity to be seen as a technological leader. Accenture reported that a majority of consumers would buy electricity, energy-efficiency products and related services from entities other than energy suppliers.

Utilities need to turn ratepayers into customers.

The industry needs to embrace the societal attributes for building trust. They have the operational attributes mastered – it’s the historical norm. But a smarter grid will change this dynamic. To do this successfully, utilities must truly listen to customer feedback, understand their individual needs and explain how the smart grid will impact individual communities. For example, utilities should be engaging with customers about smart energy use and how updated infrastructure will benefit a society in a love affair with gadgets that require a charge. They need to prove that consumers have every bit an equal say in the net metering debate.

At a macro level there is a significant byproduct of this debate that will be interesting to watch. Cities recruiting businesses and a talented workforce absolutely understand the advantages associated with transforming the delivery of electricity to homes and businesses and giving customers greater control over their energy consumption and costs. Industry, policy and regulatory influencers that put this sentiment first will be setting the stage to improve the quality of life for residents.

Rooftop solar companies, on the other hand, have a prime opportunity to assert their vision of how they will augment and benefit utilities and ratepayers. This involves correcting fundamental misunderstandings about rooftop and better communicating how it adds to the reliability and resilience of a community’s grid. Rooftop providers should continue demonstrating how their product is not a toy for the rich, but for the most part sold in a leasing model that benefits all income brackets. In the debate today, some utilities are resonating with the message of solar being installed on the backs of the average ratepayer.

There is also an opportunity for other experts to weigh in – ISOs, PUCs and large scale renewable energy developers.

The last category should be finding ways to remind audiences that the renewable/utility relationship is not defined by rooftop solar alone. For example, the majority of solar-generated electricity in the U.S. comes from commercial and utility-scale in which grid connection to utilities is delivered reliably and safely, with the utility still in the driver’s seat.  The risk of staying silent for commercial and utility-scale solar developers – not to mention large-scale renewable developers for wind and bioenergy – is being painted by a broad brushstroke that renewable energy is equivalent to distributed generation and fundamentally at odds with utility goals. Since large-scale renewable companies often sell to utilities, or depend upon utilities to approve their projects, this group of companies would be wise to champion their distributed generation cousins while reminding the mainstream and business media that their projects have a track record of being harmonious with the existing utility business.

Please don’t hesitate to contact us if you’d like to talk about building trust in the shifting energy industry. We look forward to advancing the discussion with you.

Photo Credit: Heather Kitchen