David Robinson & Associates

Specializing in public policy and corporate strategy in the energy sector.

electricity utilities have to learn to work with consumers, or lose them

  • Electricity utilities used to be able to take their consumers for granted.

  • Consumers now have increasing freedom to choose whom to buy from, whether to produce their own electricity and how to manage their consumption.

  • Consumers are able to add value to the electricity system and to participate in electricity markets.

  • The future for electricity companies is to partner with consumers.

  • For the traditional utilities, making this transition requires new corporate and regulatory strategies.

  • Traditional electricity companies are threatened from different directions: liberalisation; policies to combat climate change; falling costs of renewable power and batteries; regulation that encourages auto generation; and the development of smart electricity systems along with digital platforms.  These changes are turning once-captive consumers into buyers with many choices, and indeed into potential competitors.  

Furthermore, both large and small consumers are now able to offer increasingly valuable services to the electricity system, including flexible demand response to provide backup to intermittent renewables. The new independence of consumers and the value they now bring to the system require electricity companies to rethink their corporate cultures and their corporate and regulatory strategies.  There is more value than ever before in collaborating with consumers.

The failure to partner with consumers threatens the demise of the traditional electricity companies, as competitors use new digital technologies and business models to win consumers. On the other hand, it is far from clear that the traditional companies have the right corporate structure, culture and strategy to succeed under these new conditions.  They will need to change.

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