Categories

Tags

Back to the Future - An Overnight Success Story In Only 10 Years

A little more than 10 years ago, I joined Tendril with a goal of building a smarter market for energy products and services. While utilities provided a fundamental service, and did it exceptionally well, consumer sentiment was changing and increased competition was imminent. I used to exemplify this point by imagining what it would be like if grocery stores followed the traditional utility business model. You would walk down the aisle and nothing would have a price. You would fill a cart and 45 days later receive a non-itemized bill. That experience is subpar...so much so that if some new “grocery store” added more transparency and better service you would give it a try.

We addressed this challenge by offering a mix of hardware and software solutions that delivered better information to customers. In-home displays would sit on countertops and provide real-time analysis of energy consumption. Smart appliances would integrate with our software to intelligently manage demand. Home Energy Reports would provide useful tips for saving energy. We got a lot of it right. Today we run one of the world’s largest BEE programs. But we were a little ahead of ourselves in some areas, namely the proliferation of smart devices and new approaches to managing demand...until now.

This week I am very proud to announce the availability of Orchestrated Energy, the first cloud software solution enabling energy providers to simultaneously optimize system operation and customer comfort. For a more in-depth overview of the solution, check out the press release and this very cool video. But to put this announcement into additional context and understand why it’s coming at such a critical time for utilities, you will want to keep reading.

Our technology is predicated on three truths having a massive impact on the energy industry.

  • Value flows to whoever owns the customer relationship - The relationship with the customer is the source of immense value for utilities. Yet this relationship is increasingly under threat because of growing competition for the mind and wallet share of energy consumers. If utilities lose that relationship, they become an anonymous wires company with diminishing sources of growth beyond consolidation. To own the customer relationship, the utility must strive to become even more consumer centric, like a service-driven company in a competitive market (think Amazon and Netflix).
  • The traditional utility business model is under duress - Growth in energy sales has flattened dramatically. This reduction is driven by a range of factors, including natural energy efficiency actions like replacing desktops with smart devices; program-driven measures like demand-side management (where budgets are projected to reach $15 billion by 2025); and the rise of Distributed Energy Resources (DERs). The increase in behind-the-meter generation and smart energy devices will continue to reduce and shift load. Yet, as sales flatten, grid costs continue to rise. Multiple sources project nearly $2 trillion in needed utility infrastructure investment by 2030. Something has to give.
  • Utilities need new sources of revenue - The traditional paths to utility earnings growth -- expanding the rate base and commodity sales -- are fading. Utilities are increasingly searching for new opportunities. Some have succeeded in generating earnings from alternative investments, such as grid-scale solar. But many industry leaders agree that utilities must also tap into behind-the-meter/transactive opportunities within the evolving home energy ecosystem. Look no further than the emergence of the smart home, the Internet of Things (IoT), the data analytics revolution, and DERs penetration to understand the trajectory of these opportunities.

So if we agree all of these trends to be true - and from my hundreds of conversations with utility executives over the past few years, they certainly do - then we need new approaches to data analytics, mobile engagement and demand management.

Data Analytics. Consumers today demand personalized services. They crave the feeling that their most trusted energy providers understand their needs. Other industries have used the data at their disposal to personalize the customer experience and energy providers must do the same. By analyzing items like the home’s footprint, local weather conditions, and what motivates residents to act (among many other things), we establish a detailed energy intelligence around the consumer and their home. This approach allows us to tailor energy insights down to miniscule levels, like knowing who has a dog and how that impacts their chances of buying solar (it increases).

Mobile Engagement. To win the customer, utilities need to quickly move beyond tactical, one-way communications tools like compliance-driven Home Energy Reports, websites and basic text alerts. These types of messaging aren’t sufficient when competing with truly customer-oriented businesses. Instead, utilities must provide customers with what they’re used to from other industries – a personalized, seamless and, unified mobile experience that is tailored to their unique needs and motivations.

Demand Management. Utilities are vulnerable with asset utilization rates barely above 50%, similar to how an airline would be if it was flying half empty planes. There is a tremendous opportunity to optimize assets, drive down costs and capture customers, just as forward-looking airlines like Southwest did. These goals cannot be achieved in the residential sector through the methods in use today, which inevitably make system congestion the customer’s problem. Pushing customers complex time varying rates, rationing their service through traditional demand response, or asking them to turn off their own devices through behavioral demand response are deeply limited approaches in today’s consumer-centric world. They are akin to Netflix paying its customers to not watch a movie on Saturday night. Instead, the answer lies in Continuous Demand Management solutions that automate home energy usage, shift load in the background and integrate with smart devices like thermostats, water heaters, solar systems and electric vehicles.

Ours is a success story 10 years in the making. I’ve learned in that time that what we are trying to accomplish is both daunting and monumental. That realization has helped us stay the course and work diligently to define our future. In doing so, we are helping utilities define theirs...a future driven by the three truths outlined above and addressed by solving today’s network challenges and establishing the utility’s central role in the connected home. Our recent progress and success has me very bullish on Tendril’s ability to help define the next 10 years as well. I hope you’ll join us.

Related

Categories

Tags

  • Continuous Demand Management
  • Customer Ops & CSAT
  • DERs
  • DSM
  • Data Analytics
  • Demand Response
  • Disruption
  • Energy Efficiency
  • HERs
  • High Bill Alerts
  • Privacy & Security
  • Real Estate
  • Smart Home
  • Solar

    Subscribe to This Feed