If you’re a cleantech marketer selling to electric utilities, check out Utility Dive’s new State of the Utility survey. The 2018 survey offers important insights into the challenges, concerns and goals shared by companies in the electric utility marketplace. In other words, it’s an invaluable tool to stand inside your customers’ shoes and see what their world looks like.
The survey has plenty to say about where utilities are today and where they think they’re headed. It’s loaded with insights about operations, regulation and business models. But for this post, I look at the survey through the lens of a marketer. Reading between the lines, there’s a lot you can learn and apply to your marketing.
Here are 10 takeaways from the report to make your marketing more relevant to utility customers.
1. Help them compete. If there’s one overarching theme in the report, it’s change from competition. Utilities face more competition than ever. And they expect the competition will get more intense. The report cites a California Independent System Operator white paper that finds 85 percent of that state’s utility customers will be served by at least one other alternative energy supplier by the mid-2020s. New players want to disrupt business models and raid the cookie jar.
Takeaway: Frame your products or services to show how they help utilities compete and provide value to their customers.
2. Address pain points. The top five industry concerns are:
- physical and/or cyber grid security
- distributed energy resource (DER) policy (net metering, microgrids, rate basing DERs, etc.)
- bulk power system reliability
- integrating renewables and DERs
- aging grid infrastructure
Takeaway: Chances are your offering hits one or more of these pain points. These concerns keep utility managers awake at night. Show them how your solution will help them sleep better.
3. Partner in growth. Half of the respondents operate in traditional cost-of-service regulatory frameworks. But change is in the air. About the same ratio of those polled expect to move to a mix between cost-of-service and performance-based regulation within 10 years.
Takeaway: As revenues from energy sales decline and competition ramps up, utilities will need new sources of business, revenue and profits. At the same time, utility customers want the financial, flexibility and sustainability benefits promised by new DERs. While much of what utilities can and can’t do will depend on regulation, they would like to play a part in this emerging market as a way to offset stagnant or declining load growth. Show them how you can be a partner in this growth.
4. Overcome regulatory challenges. The top five regulatory challenges:
- justifying emerging investments
- recovering revenue from declining kWh sales
- managing growth of DERs and the revenue/rate impacts of solar
- redesigning rates to recover fixed costs
- losing customers to competition
Takeaway: Utilities hesitate to invest in new technologies if they can’t justify them to regulators. At the least, acknowledge this reality in your marketing. Show your utility customers through actual use cases how other utilities have gotten regulatory approval for new ventures. And join in industry efforts to support utility investments.
5. Prepare for greater competition. With the exception of the Midwest, with its predominance of coal-fired and nuclear energy plants, and the Southwest, all other regions of the United States expect their markets to be more competitive within 10 years. Even in the South and Southeast, the only region currently with full cost-of-service regulation and no regional wholesale energy trading, the desired market model is competitive with some cost-of-service structure.
Takeaway: Utilities overall want and expect more competitive markets. Show how your product or service will help them compete in this new paradigm.
6. Ease DER and renewable integration. No surprise here: Utilities expect to move away from coal and nuclear and toward renewables, energy storage and DERs over the next decade. More than nine in 10 respondents think they’ll increase their share of distributed generation and storage. Four in 10 expect it to increase significantly. On the minus side, about four in 10 respondents say uncertainty over markets and regulations is their single greatest challenge. And reliably integrating new resources is their second biggest challenge.
Takeaway: While there might not be much you can do to create greater certainty in markets and regulation, you can show how your product or service helps utilities more reliably fold renewables and DERs into the power mix.
7. Understand their customers. You’d think low prices would be the top reason to invest in clean energy technologies. But price actually comes in a distant fifth place. Instead, for the second year in a row, utilities say they’re investing in renewables and storage primarily because their customers demand it. “As energy markets become increasingly competitive, this motivation is likely to grow stronger,” Utility Dive said.
Takeaway: The customers of utilities want cleaner power. Let your utility customers know that you understand the importance of meeting their customers’ demands for decarbonizing their power supply.
8. Share your DER expertise. The utility outlook for DERs is upbeat across the board. About nine in 10 expect to increase their involvement with EV charging, distributed solar, smart inverters and grid communication technology.
Takeaway: Work to engage, partner and collaborate with progressive utility companies on DERs. They want to develop new revenue streams, deepen their relationships with existing customers and find new customers. They need your expertise in distributed energy.
9. Work within DER business models. A slight majority of utilities want to build their business models around partnering with third-party providers to deploy DERs on the grid. This preference is strongest on the West Coast and in New England. Other utilities, especially those in the South, Southeast, Midwest and Canada, prefer direct ownership.
Takeaway: Whether utilities eventually own and rate-base DERs or partner with third-party vendors, they realize the increasing importance of DERs to modernize their grids. Make sure your marketing taps this emerging trend to connect with customers.
10. Prepare for EV Charging. The overwhelming majority (92 percent) of utilities believe they should participate in EV charging. Their involvement could range from creating special EV charging rates all the way to owning and operating charging stations, either through their regulated utility or through unregulated subsidiaries. The potential benefits include not only new revenues but also a large source of flexible capacity for grid services.
Takeaway: Utilities see EV charging as a new business opportunity for which they’re particularly well suited. Even if you’re not in the EV industry, you can show how your products or services prepare utilities for the significant changes that EVs will bring to the grid.
Understanding the utility mindset
One of the most important tasks of a strategic marketer is to understand your customers. Well, here it is. Utility Dive’s State of the Utility survey gives you an inside look at what today’s utility managers care about.
Read the survey in its entirety to draw your own conclusions and drill down on regional variables. Of course, you should also do research with your own customers. But incorporating these takeaways into your marketing should give you an advantage over other cleantech companies competing for market share in the electric utility marketplace.
I worked for an investor-owned utility for 10 years, so I have a bead on the utility mindset. If you’d like to tap into my expertise, contact me.