Capping IT Off

Capping IT Off

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

Elon Musk’s Not So Subtle Call For Utilities To Adapt

Category : Digital Strategies

Ten years ago Elon Musk released his initial master plan. I have to admit at the time I was very skeptical of his plan. I didn’t believe that there was a market for the high-end electric sports car, never mind a mass market for an affordable mid-size electric car. However, with crude oil breaking $140 a barrel in 2008, a more proactive consumer base, and technical innovations with regards to range and charging infrastructure, not only has his plan become a reality, but the impact has reached well beyond the automotive sector. Being new to the utilities industry at the time, what I was completely ignorant of was the impact this vision would have on the way we as a society produce and use electricity.

With the release Elon’s current master plan on the heels of Tesla’s acquisition of Solar City, I have learned to not have the same skepticism. His “Master Plan, Part Deux” should serve not only as a sneak peak of what the future will look like for society, but also it should serve as a call to action for utilities and their regulators to accept the realities of the future and start the transformation today so that they can continue to service the public tomorrow.

We have all heard of the “Utility Death Spiral”, and the impact rapid change towards distributed energy resources (DER’s) can have on a utility’s business model. This is why it is important for regulators and utilities alike to hear Musk’s message, accept the realities of the future, and adequately prepare for them. His vision of pushing integrated solar and battery solutions into every residential home and expanding his electric vehicle product lines to address all major transportation segments is going to have a huge impact on the grid. From revenue, cost, operational planning, and even customer interactions, all elements of a utility’s business are going to be impacted by this vision.

Through disruption comes opportunity, and the utility of today has an opportunity to be at the forefront of this transition to a more sustainable energy economy. No, I don’t believe the “death spiral” will be the demise of the utility as we know it. Poles and wires are not going away. A colleague much smarter than I has schooled me about the merits and efficiencies of the current transmission and distribution grid. However, what is clear is that the current business models that utilities operate under will no longer be economically feasible, and those that seize the opportunity will not only be the catalysts to move us towards a more sustainable energy society, but also stand to benefit from the investment as well.

Elon Musk’s “Master Plan, part Deux” is a crystal ball into the future. The time for utilities to change and prepare for that future is now, and it requires the support of regulators to accomplish it.

About the author

Michael Malloni

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