Evolving Business and Regulatory Models in a Utility of the Future World
Published by The Brattle Group's Retail Energy Practice
The rapid penetration of distributed energy resources (DERs) into the electric utility market has led many analysts to argue that the utility business model that has been applied for the last 100 years will no longer suffice, and that a new model is inevitable and needed in the very near term. Their concern is not completely without merit: DERs are changing the supply and demand equation upon which the traditional utility business model rests. In our view, the emergence of DERs will almost certainly require that some changes be made to the way utilities make resource decisions and recover their costs of providing utility services. However, the degree and rapidity of adjustment depends upon the level of DER penetration.