Is Electric Utilities Central: The Truth About How Greedy, Ineffective, and Unfair the Utility Industry is
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The electric utility industry is a strange one. Even in the age of renewable energy, deregulation, and digital transformation, the sector feels archaic. Utilities are slow-moving behemoths that treat customers like numbers to be processed and revenue assets to be milked. With their monopolies over power generation, transmission, distribution, and billing, utilities are almost completely unreformed from the late nineteenth century when electricity was first commercialized. The good news if you’re an enthusiast of modernizing utilities or a customer who can’t stand the staid status quo is that there are plenty of options for how your money will be spent in the coming years. The bad news if you’re an electric utility executive or owner is that your business model may not survive the new competitive landscape. The following article explores why this may be the case and what you need to do about it.
Why the Electric Utility Industry Is Doomed
The electric utility industry has been around for a long time and is in many ways stuck in the past. As we will see, the sector is highly regulated, heavily subsidized, and technologically archaic. A modernized industry would require significant investments in new infrastructure, which is precisely why traditional utilities are not likely to adapt anytime soon. Technology has been a major disruptor of the sector in recent years. The rise of renewable energy has been a major driver of change. As the costs of renewables and storage continue to fall and become more accessible, utilities will face pressure to change. New technologies and services such as smart meters, smart appliances, and software offerings are also forcing change as they empower customers and reduce costs for utilities. In a competitive environment, it is quite possible that utilities will not be able to respond quickly enough.
Everything You Need to Know About Blockchain and the Future of Utilities
The electric grid is the foundation of an entire industry: the transmission and distribution of electricity. Transmission lines move electricity from where it is generated to where it is needed (usually local distribution). Distribution is where electricity is made available to customers in the form of poles and wires. If a distribution line is broken, no power will flow. This is where the grid enters the equation: If a customer’s circuit is broken, they will receive nothing. This is what is meant by a “grid emergency,” and it can have significant consequences. Without electricity, hospitals can’t run their respirators, power plants can’t run their pumps, and streets become impassible. In this scenario, if a large number of customers lose power, the impact can be significant. Without access to power, a city becomes a ghost town.
Welcome to the Digital Revolution: An Overview of Key Concepts
Before diving into the nitty gritty of blockchain and how it could dramatically transform the sector, let’s be clear about a few terms. What is blockchain? Why will it save the day for utilities? It’s not a complicated concept, but it is a surprisingly tricky topic. – A blockchain is a decentralized record of transactions. If you own a blockchain-based asset, you own that asset. There is no intermediary like a banking institution to verify ownership. – If you own a blockchain-based asset, you can trade it freely with whomever you want. This is a key distinction from traditional financial institutions like banks and stock exchanges, which are subject to regulations that restrict trading. – If you own a blockchain-based asset, you can prove that you own the asset. Traditional financial institutions can only say that they own your money. You can prove that you own an asset like a piece of real estate.
Why will blockchain save the day for utilities?
There are two significant benefits to blockchain for utilities and the industry as a whole that could help drive the technology to success. First, the technology is decentralized, which allows the market to drive its adoption. Decentralization has been a major feature of digital transformation, particularly in the energy sector: Blockchain has been cited as a major contributor to renewable energy adoption. A lack of trust in centralized organizations and the current technology model of relying on centralized organizations for every single function has been a barrier to adoption of renewables. Second, blockchain holds a significant advantage over other technologies in that it can be adapted to handle any type of data. This gives it the potential to be a platform for utilities to create new services that were previously too expensive or too complicated to provide. For example, blockchain could potentially be used to allow customers to register assets like homes and cars and track their ownership across the entire ecosystem. This could make settlements for insurance providers, gas providers, and even electricity providers significantly easier.
Bottom line
While the electric utility industry is highly regulated, heavily subsidized, and technologically archaic, it is also in a unique position to be disrupted by smart, modern technologies. Blockchain could be the catalyst to help utilities transition to a new digital era.