By Annette Brocks, Joseph Nyangon, and Job Taminiau
December 1, 2016
A powerful confluence of architectural, technological, and socio-economic forces is transforming the U.S. electricity market. These trends include, among others, increased electricity generation from distributed renewable energy sources especially solar and wind energy, aggressive state-wide demand side management (DSM) and energy efficiency policy schemes, flat to declining load growth, aging infrastructure and lagging capital investment in transmission and distribution infrastructure, security threats from extreme weather and cyber attacks.
A new CEEP publication,, Utility 2.0: A Multi-Dimensional Review of New York’s Reforming the Energy Vision (REV) and Great Britain’s RIIO Utility Business Models, examines the trends and developments in the electricity market that are placing tremendous pressure on utilities and triggering changes in how electricity is produced, transmitted, and consumed. Increased democratized choice over energy usage, for instance, is empowering consumers to take key actions such as peak shaving, flexible loading, and installation of grid automation and intelligence solutions. A key step to achieving full benefits of these programs is repurposed Utility 2.0 concepts: the distributed grid, innovations in electric market design, real-time automated monitoring and verification, deployment of microgrids, increased uptake of ‘smart meters and smarter’ grids, and investment in data analytics in order to incentivize efficient market design and flexibility.
Using a seven-part multi-dimensional framework, the report examines the role of infrastructure network, revenue models, customer interface, business model resilience, organizational logic and mandate, risk management, and value proposition in improving communication with consumers and operational boundary of utilities in the new utility business model regime.
The report assesses two prominent utility business models in the United States and the United Kingdom, the New York’s Reforming the Energy Vision (REV) and Great Britain’s ‘Revenue = Incentives + Innovation + Outputs” (RIIO) legislation in order to illustrate potential changes that await the energy utility actors. The new report concludes that positioning the ‘business model’ as the unit for analysis provides a robust and multi-dimensional tool for evaluating the suitability of new proposals for regulating electric utilities and transforming our energy governance systems into ones that support a fair, safe, reliable and sustainable economy.
 Infrastructure to services network transformation will deepen personalization and value maximization. Electric utilities should prioritize and seize these innovations to sustain the next phase of their business model transformation e.g. new services, and new platforms for extending commodity distribution, system continuity, and electric grid stability.
 Market disruption and disintermediation pose a less predictable future and significant risks to traditional rate-based revenue models.
 The grid-customer interface will become more sophisticated as the rate of interaction between consumers and utility providers go up, requiring new level of flexibility, preferences, and customer-facing automation beyond the current services.
 A compelling value proposition must include distributed generation and energy storage opportunities, particularly in using curtailable renewable energy options for grid control, resiliency, and creating value for different categories of consumers.
 A multi-dimensional analytical approach along the lines discussed in this report should be reconstructed beyond dimensions of profit motivation and profit achievement to prioritize energy cost savings, carbon mitigation, future-proofing of energy infrastructure, and reducing economic impact of extended outages, especially in a decentralized and disaggregated marketplace envisioned in the Utility 2.0 regime.
Utility 2.0: A review of New York’s REV and Great Britain’s RIIO utility business modelsA powerful confluence of architectural, technological, and socio-economic forces is transforming the U.S. electricity market.
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