New and more economically priced technology can store enough electricity to power a home or business for a few hours. That’s long enough to disrupt the peak demand charges business model many utilities rely on for their cash flows.
Alarm bells should be going off for traditional utilities. This is not just about a few wealthy homeowners making better use of their solar panels. This is about a fundamental change to the way electricity is generated, sold and used as customers use batteries to reduce their peak demand and the hefty demand charges that go along with it. This is about power plants potentially sitting idle, power lines moving less electricity and commercial customers, big and small, gaining a powerful tool to cut their electricity bills.
So what should utilities do? Rather than resist new technology, forward-thinking utility executives are drawing on their traditional strengths. They are using long-standing customer relationships to understand power requirements and system operations to integrate new technologies in a way that benefits both the customer and the utility. Failing to do so could potentially put billions of dollars of annual revenue at risk for the utility sector.
Read the full article on the Oliver Wyman Ideas app or download the PDF.
Shaving peaks with energy storage technology
Emerging energy storage technologies can enable building owners to reduce their daily peak demand and significantly cut their electric bills