IoT Blog
IoT Blog

New Business Models for Utility Fueled by IoT Technologies

Of all the developments in the IoT space, some of the most exciting are found where the integration of connectivity and communications into products and services has led to complete transformations of business models. It’s not just about enhanced products or new services – it’s about approaching business in a whole new way.

This isn’t happening only in Silicon Valley startups. It’s happening in some of the most traditionally conservative industries, like utilities. Green initiatives and government incentives, as well as operational cost efficiencies, have driven the adoption of smart meters worldwide. But now that they’re gaining momentum, utilities are starting to see other possibilities that the Internet of Things offers to their businesses and their customers.

Utilities know that they must pursue new business models in order to respond to changing consumer demands, tougher regulations, competition from non-traditional vendors, and other pressures and opportunities.

In general, these new business models have some compelling common attributes. They involve companies understanding their customers better and adapting their offerings more quickly to respond to customer needs. They involve the development of more value-added services that were not being offered before. And they involve more extensive and dynamic collaboration with other companies, some of which would be considered non-traditional partners for a utility.

This is a period of enormous growth and transformation for utilities, and many in the industry are speculating about how new business models can and will evolve. Three business models being discussed widely are the Smart Integrator, the Energy Service Utility, and Energy as a Service or Full Service Provider.

The Smart Integrator

The Smart Integrator (SI) is not interested in owning power; instead, the SI focuses on building a reliable network used by independent third-party energy retailers. SIs can offer a wide variety of revenue-generator services, such as:
  • An optimized communications network, incorporating technology for measurement, data collection and control related to grid management
  • Data analysis to predict usage or demand response
  • The ability to manage two-way power flow, which, in turn, will enable consumers to shift usage in response to price signals

The Energy Service Utility

The Energy Service Utility (ESU) is like the traditional utility, except its focus is a customer service-centric philosophy based around energy efficiency.

The Energy as a Service or Full Service Provider

The Energy as a Service (EaaS) or Full Service Provider (FSP) will offer customers a variety of services, such as financing programs for renewable generation technologies like solar and wind power. The essential benefit of this model is enabling traditional utilities to modernize their offerings without fully modernizing the grid.

Taking action to leverage the IoT opportunity

In order to implement these new business models, utilities need to move quickly on IoT solutions and their agility will allow them to scale and evolve their solutions quickly and cost-effectively. Choosing the right solution is key to ensuring the interoperability and flexibility required both now and for future needs. We’ve outlined five essential steps to consider in doing this, available in a new whitepaper now available for download from our website, called “IoT Opens Utilities to New Business Models.”

Download White Paper