The electric utility industry is looking for a new business model. The need for a better model is a recurring theme in workshops and conferences held across the country. The drum beat is getting louder.
The current command-and-control, resource optimization business model is fraying at the edges. This model cannot accommodate innovations as simple as rooftop solar and storage in a rational way. Smart home capabilities such as Nest and HomeKit are going to waste because they don’t have the right pricing signals.
Our current business model is stifling innovation. The model is going to have to be replaced by something that is more efficient, more fair, more transparent and more friendly to innovation.
The Transactive Energy (TE) model is the ultimate business model. It is efficient, fair, and transparent. It’s ability to stimulate innovation has been proven. It has worked for everything from buying and selling baseball tickets to filling seats on airplanes. Most businesses in the free world have gone to an internet-based system of forward and spot transactions to allocate resources. The transformation has been good for the customers and the businesses.
In order for Transactive Energy to work for electricity someone will have to build TE Platforms. TE is built on a system of forward and spot tenders and transactions for energy and transport. We need platforms where the tenders for demand and supply can be made and transacted. The rest of the electricity system will function more or less as it does today. Its role is to maintain reliability and energy quality, and to make deliveries.
TE Platforms don’t exist in the electricity market today. Who will build them? I don’t know. Do you want to guess who it will be?
For more about the TE business model see our new book, Transactive Energy: A Sustainable Business and Regulatory Model for Electricity.
The book is available in paper back from Public Utilities Fortnightly.
The book is available for the iPad or Mac on iTunes.
It is available for the Kindle and PC on Amazon.
To follow industry developments in TE visit the Transactive Energy Association group on LinkedIn.
If you would like to receive more posts about Transactive Energy and related business opportunities by e-mail, just submit your address here.