Photo Credit: Bloomberg
You can’t throw a stone at a clean energy conference without hitting a speaker that pulls out the telecom analogy while discussing the changes happening in the electric utility industry.
At the Bloomberg New Energy Finance Summit, former Vice President Al Gore started with that analogy, but then took a detour.
He used the telecom analogy when talking about the leapfrog effect that could happen with distributed generation in places without the grid, such as what happened in many parts of sub-Saharan Africa, where consumers went straight to mobile phones instead of waiting for the buildout of telephone wires.
But where the grid exists, “This is like satellite TV versus the cable monopoly. It’s exactly the same as with distributed solar,” Gore said. “Renewable energy is providing choice.”
Gore recalled that when President George H.W. Bush vetoed the Cable Television Consumer Protection and Competition Act of 1992, it was passed by the Senate and House just days later. Gore said it was the option of consumer choice that compelled many conservatives, including Strom Thurmond, to vote for the bill despite the veto by a Republican president. The issue of choice is also why many conservatives back rooftop solar today.
“We are not many years off from a day where I could ask an audience, ‘How many of you no longer have an electric utility grid connection?’” said Gore. “It will be growing year by year.”
But the analogy falls short of explaining what the new world of energy services might look like. The move away from cable today is more about a choice to have a tailored, yet distributed, landscape of media, rather than just the option to ditch the incumbent.
It was not just the availability of satellite TV that drove people from their cable service providers. It is internet-based content providers such as Netflix, Hulu and Amazon that have truly upended the market.
Even so, “It’s a good analogy,” said Badar Khan, CEO of Direct Energy, which bought Astrum Solar last year. He added that energy choice could and should go far beyond just generation. It should include a variety of rate plans, tools to lower consumption, energy storage and protection for some of the biggest energy users in the house, such as the HVAC system.
Direct Energy is just one player offering many of these services, and there is much more innovation to come in the next few years.
Michael Liebreich, chairman of Bloomberg New Energy Finance, described the global playing field for new energy services as a battlefield, although he said full grid defection would be “a minority pursuit.”
Even without massive defection, however, the business model for traditional energy suppliers is being challenged globally. For those trying to keep up, the issue is not just traditional generation and the existing grid versus distributed solar, but rather who will emerge as the energy services provider of the future.
“The competitors today might not be the competitors tomorrow,” said Khan.