Change In Business Models Of Electric Utilities To Cut Costs And Improve Efficiency

Utility business models are continuously evolving from traditional electricity generation models to new business models such as distributed generation models to cut costs and improve transmission and distribution efficiencies....

Utility business models are continuously evolving from traditional electricity generation models to new business models such as distributed generation models to cut costs and improve transmission and distribution efficiencies. Distributed generation refers to localized power generation using solar panels and other low-cost technologies to produce electricity close to the point of consumption. Consumers are switching to more cost-effective and controlled distributed generation networks, therefore electric power generation companies should now focus on distributed generation rather than a centralized electricity generation model.  Also, many companies are using new revenue models and incentives instead of traditional cost-of-service models. For instance, New York’s (Reforming Energy Vision) REV docket is focused on distributed generation and performance-based incentives to push utilities to serve grid needs. Electric utilities in states like California, Minnesota and Massachusetts are also involved with the REV initiative. According to Citigroup, in next two decades the European decentralized electricity market will grow to one-third of total utility market.


THE BUSINESS RESEARCH COMPANY EXPECTS THE global generation, transmission, and distribution market TO GROW TO $3 TRILLION BY 2021


Asia Pacific was the largest region in the generation, transmission, and distribution market in 2017, accounting for $1 trillion or over 40% market share. This was mainly due to the presence of a large number of households, industries and power generation companies in the region.


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The chart below shows the year-on-year growth of the global generation, transmission, and distribution market.

According to The Business Research Company’s Consultant, Nitin Gianchandani, electric power generation companies are increasingly using batteries to store solar energy during daylight hours. These energy-storage sites consist of large lithium-ion batteries. These batteries store enough energy to serve as a back-up in case of fuel shortages. They are designed to absorb solar power and feed it back to the grid. These systems minimize the need for capital intensive power generation plants, thereby enhancing transmission and distribution efficiencies and thus reduce operational costs. For example, San Diego Gas & Electric operations center has installed energy-storage systems with big batteries to store electric power. Arizona Public Service Co. has installed a $2 million battery system in Phoenix to store energy. In 2016, lithium-ion battery prices fell by 70% and are expected to shrink further in future, thus driving their use in power grids.


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Électricité de France (EDF) was the largest company in the generation, transmission and distribution market, with revenues of EUR 16.2 billion ($78.8 billion) for the financial year 2016. EDF’s growth strategy aims to increase power generation from renewable sources. The company spent around €840 million to upgrade the French hydro fleet during the period 2014 to 2021. EDF also plans to construct three new wind farms in France to expand its production.


The generation, transmission, and distribution market is segmented into Electricity Generation and Electric Power Transmission, Control And Distribution.


Electricity Generation segment includes power generation companies that produce electricity using a variety of sources such as hydro, fossil fuels, solar, nuclear wind and biomass.


Electric Power Transmission, Control, and Distribution segment includes establishments involved in operating electric power transmission and distribution systems that control the transmission of electricity from the source to consumers.


Generation, Transmission, And Distribution Global Market Report 2018 is a detailed report giving a unique insight into this market. The report is priced at $6000 for an individual user. To use across your office, the price is $9000 and $12000 if you wish to use across a multinational company.


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