Sell me light-hours, cooling hours and water-heating hours. But don't sell me kilowatt-hours. If I took Peter Fox-Penner's advice, that's what I would tell my electric company.
And if utilities took his advice, that's what they would do. Roger Sant, who founded AES, proposed the idea in 1980, Fox-Penner, of the Brattle Group, recalls in a paper, and Thomas Edison's business started out that way: as an energy services company. Only later did it switch to selling only the kilowatt-hours, and leaving the electric appliances to others.
In 1980, the time was not right. But Fox-Penner sees its moment coming.
Efficiency is driving kWh sales down (well, yes, the economy has a lot to do with it, right now.) He sees efficiency providing "somewhere between 15 and 40% of our total electricity 'supply' between now and 2050." If power companies don't change their business model, they won't be able to get the money to invest in all the expensive changes needed to de-carbonize, modernize and maintain the system. Who wants to finance a business that's selling less of its product?
So ... change the product. And unlike any previous time, smart grid technology will allow that to happen, Fox-Penner says. So it would be something like the cellphone business, where the customer buys the hardware, the talk minutes, text messages and all the other things ... but not the bits, the commodity underneath it all. Because who wants to buy bits?
Fox-Penner doesn't make it seem easy, acknowledging that "It's a little like rebuilding your airplane, changing the interior seating, and reissuing new tickets to everyone on board, all while the plane is in the air." But he expresses optimism that it can be done.
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