One of the unfortunate consequences of the jarring coronavirus shutdown has been the delay or pushback by US utilities of many interesting and important innovation initiatives and projects. For years now, we’ve seen increasing waves of progress among utility clients, from Customer Offices bringing the customer-experience perspective to their organizations, to cutting-edge applied R&D projects for the grid, to more recent developments setting up centralized Innovation offices to catalyze exploration of new business models and revenue streams. Much of that progress is now on pause.

That matters because utilities play a critical role in orchestrating the energy transition to a cleaner, digitally operated, distributed grid that increasingly incorporates customers in new ways. Yet, post-COVID narratives have begun emerging among some industry practitioners, pushing a retreat to the basics and a concentrated focus on safety, efficiencies, and cost-takeout.

Integrating renewables, developing utility marketplaces for customers, and fostering more innovative internal cultures should be delayed another decade, some argue. The reasons given range from the plummeting prices of oil and gas in the crisis and uncertainty of government support for renewables in the face of other funding priorities, which would impact the overall economic balance of the transition, to questions about declining utility staffs and resources needed to safely manage existing grid operations.

In some ways, this cautious and conservative perspective makes sense. Energy demand indeed fell off a cliff in March, with manufacturing, air travel, and other major drivers of the economy shutting down. The International Energy Agency (IEA) said it expects energy demand to take a 6% hit this year globally, which is the largest drop on record, and percentage-wise it’s the steepest decline in 70 years.  The shape of electricity demand during lockdown was also changed dramatically, with load curves during the week resembling patterns typically observed only on Sundays. The IEA expects this year will see the largest decline in electricity demand since the Great Depression, though more modest than the hit to oil and gas. With declining revenues, organizations will always re-prioritize investments, and many often choose to bolster core operations rather than pressing for new and uncharted growth opportunities.

That said, to put the brakes on energy transition now, and to discard the progress made toward driving innovation within utilities over the last five years would be an enormous mistake for the industry with overwhelming social and environmental costs. Why?  First and foremost, the pandemic has probably done more than any other crisis, Super Storm Sandy included, to convince people that seemingly invisible macro-forces like viruses or climate change, can suddenly hit hard and impact people’s daily lives in a significant way. Many commentaries released during the crisis demonstrate a viable link between the virus and climate change and certainly illuminate the way that explicit warnings to prepare for either crisis have tended to go unheeded. While responses to the virus have become politicized – as has climate change – the urgent need to address both issues remains a pressing concern.

Now more than ever, corporate and investor sentiment is shifting to favor solutions like digitized renewables that can help stave off the environmental crisis, rather than putting those dollars to cleaning up after natural disasters of different kinds. The National Oceanic and Atmospheric Administration (NOAA) estimates the number of disasters with over $1B in damages over the past five years was double the average over the last four decades. Fourteen billion dollars was spent cleaning up and recovering from weather and climate calamities in 2019, and the projections are even worse. BlackRock estimates a 275% increase in major hurricane risk by 2050 under a “no climate action” scenario that assumes continued reliance on fossil fuels. One of the biggest reasons that they and other major financial institutions are now emphasizing Environmental, Social and Governance (ESG) criteria to guide their investments is because they have been calculating the costs of inaction that are increasingly tipping the balance in favor of preventive measures.

Many competitive energy providers are answering the call, developing cleaner and more flexible products and services, along with simple, intuitive engagement mechanisms to meet the evolving needs of residential, and commercial & industrial (C&I) customers. We’ve been helping several of these providers think through bundled plays that deliver increased efficiencies and decarbonization value. Packages, for example, that combine microgrid solutions for clients like big-box retailers, progressive technology companies, hospitals and airports, with finance mechanisms, including Energy-as-a-Service models. Together, these put cleaner, more resilient solutions within reach. We are also seeing an uptick in C&I demand for better data and analytics solutions for energy and advice on how to optimize systems and save money, as well as more financial (PPA) and on-site options to procure renewables. Interestingly, clients, from grocery chains to cable companies, also increasingly want to support the provisioning of direct-to-consumer energy services. These plays, from energy advisory, clean procurement, connected buildings and homes, to EV-charging solutions, are being made by non-utility actors, with many more coming down the pike. If utilities pause their growth agendas and take a backseat to the energy transition that is happening, there’s little guarantee they will ever catch up.

Indeed, the time is ripe to continue and advance the innovation and growth projects that utilities have only begun to imagine and create. Some of the most exciting that we are engaged in with clients include efforts to develop and activate a range of smart home applications for meters that have long been touted but rarely implemented. We also get excited by projects to bring the “Virtual Power Plant” technologies and know-how to the US from Europe that aggregate and dispatch renewable and battery technology at the edge of the grid. Knitting these capabilities with grid-to-edge, distributed renewables siting, forecasting, and implementing tools will allow us to establish closed-loop, bidirectional grid communications and power-flow capabilities. In addition, the efforts of regulated utilities to establish or mature innovation organizations and explore their 2-5 year growth possibilities for their regulated and non-regulated entities must continue for our energy system to evolve and strengthen. These efforts to help pivot their core operating models to be compensated for orchestrating the ongoing energy transition are hopeful and exciting.

Let’s not waste this moment to emerge from the crisis with an even clearer and compelling growth agenda for utilities than ever before!