Who Dare Challenge the Mighty Utility Companies?
The evolution of the utility industry has been pretty stagnant over the last hundred years or so. Power plants generate the electricity, it gets sent to your house through a network of wires and transformers, and the utility company sends you a bill every month. Not much has changed, and no one has really questioned the process. If it’s not broken, don’t fix it, right? Most of us may have similar thoughts, but not the tech companies. They see everything as an opportunity for improvement.
Bloomberg reported how Todd Pedersen, CEO of Vivint, squeezed the home security company he established in 1999 into the electricity business through the implementation of rooftop solar and digital energy management. “It helps that we’re competing against an industry that isn’t particularly evolving,” he stated.
So much time has passed since any major changes that it almost seems like the utilities aren’t sure how to improve the system, but tech companies are ready to jump in. “The battleground over the next five years in electricity will be at the house,” explains David Crane, CEO of NRG Energy, who has taken a leadership role in the development of solar power.
When we think of who our competitors or partners will be, it will be the Googles, Comcasts, AT&Ts who are already inside the meter. We aren’t worried about the utilities, because they have no clue how to get beyond the meter, to be inside the house.
What’s the plan?
Vivint has a strong home-security base of 800,000 customers that stretches across six states and the District of Columbia. Its plan is to lease solar rooftop arrays. Blackstone Group, which bought Vivint for a hefty $2 billion two years ago, installs the solar equipment free of charge. Bloomberg explains the process, “Customers sign contracts to buy the power their systems generate at rates as much as 30 percent lower than the local utility. In just two years, Vivint’s solar unit accounts for 9 percent of all new rooftop solar installs in the U.S.”
As an added bonus, since customers are still connected to the grid, Vivint is able to sell extra energy back to the utilities under “state-mandated net metering programs.”
Several tech companies, including Vivint, are continuing to develop a variety of applications that can be used to save energy for homes and businesses. Smart thermostats, automated lighting, and the ability to digitally control appliances are among some of the cutting edge technologies. Utilities won’t be left completely out of the loop. They can team up with home-automation companies to work with residents in reducing energy consumption during peak hours to avoid power outages. (Consumers love this program because they get paid for reducing energy.)
What do you think? Will the old-fashioned utilities soon be obsolete? Leave your thoughts in the comment section below.
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