The Coming Personal Energy Revolution

A new, powerful trend – the Personal Energy revolution – promises massive transformation over the coming decades. As the quintessential input to all value we hold dear, energy has been the realm of large powerful companies since the industrial era. Steam revolutionized work and travel, then fossil fuel combustion fostered massive advances in all industries, the transportation and electric industries especially. But energy has so far remained a complex industrial concern that requires massive capitalization and coordination to distribute a commodity over vast, complex infrastructures, be it electricity, gasoline, or natural gas.

The potential for Personal Energy is driven by decentralized energy resources or DER (e.g., solar PV and LED lighting, also emerging technologies like electric vehicles and energy storage). DER providers are offering compelling new value based on declining prices, rapid growth and new business models. On the back of such technological and business advances in DER, energy is about to join the broader personal services revolution driven by advances in information and telecommunications, promising independence from traditional grids and electric utilities.

In the modern digital economy, technology advances move us all along a continuum from infrastructure commodities to high-value, personalized services. Innovation enables greater personalization/value to end-users in mass markets formerly satisfied by basic distributed commodities. Over time, new companies offer new products and services by enhancing essential commodities offered by distributors. Then new solutions aligned to specific problems emerge, often with altogether new business models. As value increases multifold and prices rise accordingly, markets mature, and the epitome of personalization - “as a service” offerings – take the form of applications that leverage platforms to enable full customization and ultimate value.

This Infrastructure-to-Services path is well worn. We've already seen versions of this in Railroads-to-Automobiles, Dial Tone Telephones-to-Smart Phone Apps, Mainframes-to-Tablets, Cable-to-Streaming Video, and most recently, Taxis-to-Uber. Soon, we're going to be talking about Grid Energy-to-Personal Energy.

Along this path you'll also find such familiar platform giants as Google, Apple and Amazon, leveraging that infrastructure of the 21st Century, the internet and the emerging third platform. On this path, you will start to find new DER entrepreneurs who will challenge old business models by offering Personal Energy as a service. While energy will remain as essential as it ever was (even more so in the digital economy), utilities will gradually lose their exclusivity as producers and distributors of commodity energy. Existing and new companies will start with energy, but then add innovative new energy products, services and solutions to create new forms of customized value, going all the way out to new personal energy apps running on new personal energy platforms, opening up vast new amounts of value along the way.

The challenge for electric utilities around the world is to shift their perspective from past success to new opportunities, going well beyond simple accommodation of new trends. The rise of Personal Energy will demand far more of electric utilities who are used to providing reliable electricity at a reasonable rate. As with their new found competitors, utilities will need to use commodity energy as the starting point to reinvent themselves as Personal Energy Providers. Shifting to personalization and value will lead them to build on their core competency of providing highly reliable electricity at low rates to gain competitive advantage. How will they meet this new demand? How will they react to these challenges? Those that embrace this change now and accept this as their new Big Opportunity will be best positioned to benefit from such fundamental changes coming our way.