- Utility Transformations
- Utility Innovations
- Residential DER
How a Utility Residential Energy Storage Solution Will Meet Customer Needs and Optimize the Local Grid
Historically, residential customer relationships with electric utilities have consisted of billing transactions and the delivery of reliable power to the home. Interactions beyond the exchange of payment for electricity have traditionally been limited to challenges such as the loss of power or rate change inquiries. Today, the global electric power industry is undergoing a transformation from centralized generation toward a multidirectional combination of distributed energy resources (DER) and smart grid solutions. Known as the Energy Cloud, this mix of solutions is poised to disrupt traditional residential utility business models, leading to the need for new revenue growth opportunities for utilities while creating new opportunities for residential utility customers.
A New Era of DER
A DER pilot program with Liberty Utilities in New Hampshire has the potential to become a real-life example of DER that can support customer and local grid operator needs. In this program, residential customers would be able to obtain access to battery system-enabled backup under a time-of-use electricity rate by purchasing a Tesla home battery system for a flat monthly fee over a 10-year period. From the utility perspective, Liberty Utilities would then be able to aggregate the batteries across a virtual power plant software platform to reduce its costs to manage system peak energy use. The program, which is awaiting final regulatory approval, will create a bring your own device program that other battery energy storage companies can pursue.
The era of residential customer DER solutions that can also have utility benefits is now upon us. Guidehouse Insights’ recent report, Market Data: Emerging Residential Energy and Non-Energy Solutions, features these types of residential DER solutions. In addition to DER exhibited by Liberty Utilities and Southern Company’s recent Smart Neighborhoods initiatives, the report focuses on other solutions. These include community energy, smart home-home energy, mobility, and non-energy supply-related lifestyle and care solutions related to entertainment healthcare, security, and heating, cooling, electrical service, and appliance-related repair and warranty services.
What’s Next for Utilities and Energy Suppliers?
Guidehouse Insights’ new solutions framework focuses on how retail-regulated utilities will better understand address their customer’s needs and identify new revenue offerings and/or partnership opportunities to meet customer expectations for solutions beyond traditional energy power sales. In deregulated markets, the solutions framework will help energy suppliers and disruptors better understand transaction and business models for bundling energy and non-energy services with energy supply.
Utilities looking at residential customer solutions like DER need to gain a deeper understanding of how these solutions can overcome customer payback hurdle and improve their customer satisfaction, while also improving their ability to manage the local grid’s needs. Assuming nothing derails regulatory approval, New Hampshire could become the proving ground for several of the hottest topics in distributed energy policy. The Liberty Utilities program appears poised to address each of these challenges in an innovative way.