Just a 5% increase in off-peak sales could double a utility’s income. With electric sales growth flat in many areas across the country, and carbon reductions an increasingly large part of customers goals and governmental policies, electric utilities can act now and build towards a stronger financial and environmental future.
With the right choices, utilities can increase kWh sales significantly, and the majority of those increases can come at off-peak times – delaying capital investment in new generation assets and minimizing peak costs. These additional off-peak sales, and the increased margins that go along with them, can have a major impact on a utility’s economics. These financial gains could grow customer value through increased contributions to their local communities, governments and/or lower rates for all customers. The key to this success is electrification.
Strategic Electrification Improves Utility Economics
Electrification is the process of switching from one fuel (natural gas, gasoline, etc) to electricity. This can happen with all your electric customers, from industry to commercial to municipal, but the majority of accounts at most utilities are residential, which means there are significant opportunities for fuel switching. Additionally, switching away from fossil fuels reduces total carbon emissions, particularly as the grid gets greener. The biggest opportunities to fuel switch come from home heating, transportation and hot water, but nearly every fossil fuel end use has an electric equivalent. Utilities need to prioritize those technologies that result in not just maximum kWh sales, but also those that don’t increase peak costs.
It is also crucial to consider the customer. As a community-owned utility, a recipe for success is to ensure increased electric usage can lower other costs for the customer while improving customers quality of life. How can utilities know which technologies are good, how much they are worth, and how to increase adoption?
Hometown Connections, Inc., the trusted resource for insights and services for community-owned utilities, has partnered with Sagewell, Inc. to deliver load growth consulting to public power organizations across the county. Sagewell provides consulting analysis and recommendations to utilities on how to achieve growth through evidence-based high-impact electrification programs.
In such a study, the first step is to understand what various electrification opportunities are worth to the utilities and their customers, and how much carbon emissions can be reduced. Electric vehicles and heat pumps will most likely have the biggest impact, but other technologies, like water heating, can be analyzed as well. If a utility has AMI meter data, Sagewell can use the local meter data in the analysis. If it does not, Sagewell has AMI data in its extensive data library, and can build accurate models based on real-world data, rather than assumptions, to estimate costs and income.
Once the value of different technologies is understood, Sagewell, joint action agencies, and their member utilities can design high-impact programs to drive electrification technology adoption. Through significant first-hand program operating experience and studying electrification programs nationwide, Sagewell has deep, data-driven insights into how to drive adoption of EVs and heat pumps. For example, it may come as somewhat of a surprise, but traditional methods of driving adoption – education and rebates – aren’t the most effective way to increase customer adoption. Also, picking the wrong technology may not increase sales or reduce emissions at all. On the other hand, active target marketing to customers can deliver the best-suited technologies to those customers who are the best fit for them and thus creating high customer satisfaction.
The EV Load Management Example
A great example comes from Electric Vehicle (EV) load management. With typical charging rates between 6kW and 11kW, or even as high as19kW, EVs are uniquely likely to increase peak and capacity costs, particularly for utilities that peak in the early evening when drivers are getting home from work. Hardware load-control solutions are often more expensive than the value of saved capacity. One alternative is the Bring Your Own Charger® (BYOC) program, an EV load management solution that doesn’t use any hardware, but instead leverages whole-home AMI meter data. BYOC has off-peak compliance rates over 95%, has a national record-breaking EV enrollment rate of 50% and costs less than half what many hardware-based programs do. And, for those familiar with the Net Promoter Score customer satisfaction metric, it has an exceptionally high score of 78.
Joint action agencies and their members have a great opportunity to increase sales, increase customer satisfaction and improve environmental outcomes. The first step is understanding how to move forward. Hometown Connections and Sagewell can help. For more information, send an email to firstname.lastname@example.org.
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