That said, P&U companies are seeing record levels of investment, as well as calls to modernize their grids and add renewable distributed energy generation. In response, utilities are striving to quickly finance and build additional energy infrastructure while continuing to balance reliable energy delivery, keeping customer rates low and meeting decarbonization targets. With the need for energy storage becoming important, the time is ripe for utilities to focus on storage solutions to meet their decarbonization goals. Finally, accelerating electrification and data center demand may usher in new entrants and new business models, reshaping the landscape for utility companies. In any event, full-scale deployment is likely still several years away but progress on these first-of-a-kind projects is expected to continue. However, carbon strategies may evolve with potential policy changes from a new administration.
CDR technologies go beyond capturing emissions from specific sources and aim to remove carbon dioxide directly from the atmosphere. CCS technologies can capture carbon dioxide emissions from power plants and other sources and store them underground. Carbon capture and storage (CCS), carbon offsets, and carbon dioxide removal (CDR) are emerging as key components of the comprehensive carbon reduction plans of utilities.82 Initiatives like the Low-Carbon Resources Initiative are considering potential offset or carbon removal strategies.83 As the industry prepares for rising demand from data centers, VPP platforms leveraging AI and https://contrefacon-riposte.info/how-i-achieved-maximum-success-with-13/ ML algorithms can aid in managing power generation assets, understanding customer behavior, and adjusting output levels based on demand and forecast consumption. Additionally, utilities may still have an opportunity to unlock potential from commercial and industrial customers.64 The immense energy demand of data centers, often seen as a challenge, can become an asset for the future grid. In 2024, utilities began rethinking the role of both existing and new nuclear, likely recognizing its potential to provide a differentiated value proposition for a decarbonized grid.40 This shift is reflected in actions and plans, in which they appear to be increasingly incorporating nuclear power into their portfolios in multiple ways.41
Some AI models are deployed on-premises to handle critical https://stephanis.info/2020/09/19/why-people-think-are-a-good-idea-10/ functions that cannot be moved outside of secure environments. Utilities are under pressure to deliver more reliability with the same resources. Dynamic tariffs are likely to spread, exposing hyperscalers to real-time signals. In 2026, performance-based interconnection could increasingly tie queue priority to telemetry and flexibility. Some utilities and regulators now require hyperscalers to share costs, provide telemetry, and demonstrate flexibility for faster interconnection. Once viewed as inflexible mega-loads, hyperscalers are now potential operational partners.24
Transform to meet energy demand and capture load opportunities
- Some utilities are flush with cash, while others face significant balance sheet issues.
- Renewables and the developing infrastructure needed to support them are going to continue to be critical to meeting increasing energy demand as well as state and company decarbonization targets.
- “To succeed in the years ahead, utilities should balance the needs of meeting the growth in energy demand with continuing the energy transition path, hardening the grid to enhance reliability, managing the cost to the customer and transforming business models to be more customer-centric and digital-focused.”
- This technology is also used to optimise the efficiency of the supply chain, reducing costs and ensuring a reliable supply of services.
Utilities should leverage opportunities to provide adjacent services and solutions to help address energy resiliency and independence needs. Supply chain management for critical equipment, infrastructure integrity, a skilled workforce and sophisticated cybersecurity measures should all be top of mind as well. Companies should also incorporate asset risk monitoring and management to inform planning priorities.
How digital twin technology powers the future at Xcel Energy
This technology is also used to optimise the efficiency of the supply chain, reducing costs and ensuring a reliable supply of services. The utilities sector must prepare for potential disruptions from new technologies and regulatory frameworks that could redefine energy distribution and consumption patterns. This will lead to increased investments in the sector, as well as job creation. This includes investments in traditional utilities such as electricity, gas, water, and waste management, as well as investments in renewable energy sources. In terms of direct jobs, the utilities industry employs 7.9 million people in the production of energy and 12.5 million in the distribution of energy.
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Understanding it helps identify market strengths, weaknesses, opportunities, and threats. Finally, the utilities supply chain is heavily reliant on the availability of skilled personnel. The downstream activities of the utilities supply chain involve the distribution of the electricity, gas, and water to customers. A streamlined supply chain is essential for competitiveness, affecting cost, speed, availability, and customer satisfaction. An industry supply chain is a network of suppliers, manufacturers, distributors, retailers, and customers that creates and delivers a product.
One hyperscaler, for example, has embedded PJM grid telemetry into its scheduling systems and partnered with two utilities to reduce AI processing workloads during periods of grid stress.34 As utilities pursue these strategies, they aim to procure all resource types while prioritizing deliverability, project readiness, and portfolio resilience.22 Some state commissions are expanding integrated resource planning tools to allow procurement between planning cycles when demand or transmission timing shifts.23 Electric power companies are pursuing strategies across three horizons, focusing on accredited peak contribution rather than nameplate megawatts.13 In the near term, companies are bridging reliability gaps through incremental firm generation and operational flexibility. In 2026, the challenge for utilities will be quickly delivering uninterrupted or “firm” capacity to stressed parts of the grid.7 Customer affordability will remain a central pressure point as retail prices continue to rise. Future-focused digital grid leader. Fueled by human collaboration and the latest technology, we helped a leading energy company find opportunity in sustainability.
Next-gen technology drives new strategies to surpass customer and stakeholder expectations. Energy company CISOs must demonstrate progress using the right metrics to validate their cybersecurity investments amid board scrutiny. Discover how power and utility companies can transform regulatory compliance and risk management into a strategic advantage amid evolving regulations. An EY survey shows that executives are evolving AI governance and strategies and pinpointing how investment translates into productivity.
- Further, compared with other industries, the P&U sector is much more fragmented, partially because of its unique and heavily regulated structure, which could drive broader consolidation within the next six months.
- This is likely important for enhancing regulatory outcomes by working to ensure that DER projects address the specific reliability needs of the community.
- Given that utility operations are vital to the overall functioning of the economy and to national security, electric utilities must strike a balance between risk and reward through proper controls and governance models.
- Collaborate with customers to increase energy use when carbon-free energy is available on the grid.
- Combination of such capabilities can help not only strengthen the grid at its most vulnerable points supporting reliability, particularly in areas experiencing high energy demand, but also provide resiliency, mitigating the risk of disruptions.
Build a workforce with the right skills and resilience
While the future of the power and utilities sector has never been less clear, it is certain that companies will need to change the way they do business today. Leaders should build transformational resilience in their organizations by prioritizing retaining and attracting key talent, as there is continual competition in the sector for specialized talent that can help companies exceed their customers’ expectations. Failure to maintain an appropriate balance could have negative consequences in attracting and retaining talent, as 56% of employees in https://talsit.info/my-most-valuable-tips-10/ our survey say there’s too much change happening at once.
Combination of such capabilities can help not only strengthen the grid at its most vulnerable points supporting reliability, particularly in areas experiencing high energy demand, but also provide resiliency, mitigating the risk of disruptions. This occurred against the backdrop of rising electricity demand, on one hand, with DERs providing reliability to the grid and challenges such as permitting, and interconnection with building utility-scale resources increasing, on the other. In 2025 and beyond, electric power utilities can consider the following while making strategic choices as they keep a focus on reliability, affordability, and sustainability. Rising wholesale prices, projected to increase by 19% on average between 2025 and 2028, combined with escalating distribution expenses, are likely to result in higher electricity bills for consumers.19As of August 2024, the year-to-date average power price across all sectors stood at 13.09 cents per kWh, reflecting a 2.7% YoY increase due to rising demand.20 Many are upgrading legacy systems by investing in cloud-based ERP solutions and operational technologies, including geographic information systems (GIS) and automated metering infrastructure (AMI). Uncertainty also exists around support of existing renewables policies, with the uncommitted funds from the Inflation Reduction Act at risk, while in-flight projects and committed funds are expected to continue.