Utility transformation: Two emerging models

At the recent Siemens Smart Grid Software Leadership Conference, there was much discussion of utility business models as technology transforms the industry.

One approach getting attention is when a distribution utility operating a grid enables distributed energy resources: the distributed system platform provider model.

Smart grid investments enable utilities to manage variable generation output, as well as delivery of start-up surge energy when motors turn on (such as refrigerators or air conditioners). These investments also provide grid-based energy storage which supplies power when renewable resources (such as solar) are not operating.

A second model discussed at this conference involves empowered consumers who manage their energy use more consciously. Utilities that offer the "consumer empowerment triad" (information, time-varying pricing options and automated thermostats and devices) can foster close ties with customers while providing added value. Empowered consumers can participate effectively in energy efficiency and demand response programs, saving money and reducing their carbon footprint.

Although both models have long been discussed in the industry, they're finally starting to emerge in real-world utility practices. For instance, the major German utility RWE is pursuing both models in order to adapt to Europe's fast-expanding renewables environment.