“I don’t use a MacBook … why are you driving cars with internal combustion engines?”
“I don’t use a MacBook … why are you driving cars with internal combustion engines?” ~ Brian Janous, Director of Energy Strategy, Microsoft
That point by the Director of Energy Strategy at Microsoft – an excellent one I must say – was made at the Smart Electric Power Alliance’s annual utility conference during the opening keynote panel. I facilitated the discussion, entitled, “How your largest customers are acquiring energy and how to get in the game,” and if you’ve been reading this blog for a while, you know this is a topic I’m hot about right now. Here’s why:
- 86% of the largest companies in America now publish an annual sustainability report.
- 66% of business decision-makers in the U.S. and Canada reported in our latest B2B Pulse report that they expect to increase their reliance on renewable energy.
- The RE100 – a collection of 89 companies (and growing) committed to going 100% renewable – is already 50% of the way to their goal.
- More often than not, that procurement of renewable energy is happening without the local utility.
The aim of the discussion was to find out why – why are the largest companies in America often going around their utilities to procure the renewable energy they need to achieve their sustainability goals? Here are the key takeaways:
- Large companies care less about who they’re buying renewable energy from; they care about what they’re buying. What they want to buy is a renewable energy deal that gives them additionality/makes a material impact on emissions reduction. They also want price signals and to manage their own risk (they do NOT want the utility to manage that for them).
- The standard (and unimaginative) utility response is “no.” All three of the folks on the panel – which also included John DeAngelis, Energy Manager for Steelcase, and Rose McKinney-James, board member with MGM Resorts – have run into brick walls as they tried to get what they wanted/needed out of a utility. They all said they’d prefer to work with their local utilities – not against them – to get renewable deals done. But they’re often met with the standard refrains: “It’s just not possible to give you what you’re asking for”; “Our regulators won’t let us.” Rose’s advice? “Stop sending people to negotiate with us who embrace the status quo.”
- In an environment of flat to negative load growth, some renewable deals could add revenue for a utility … or make the situation worse. Brian commented that often Microsoft is looking to bring brand new load into a utility’s service territory, so the utility has the choice of picking up that new revenue or letting a developer have it. In those cases, he has sometimes found utilities to be a little more willing to work something out. And as you’re probably aware, MGM Resorts International (and other Las Vegas casinos) has left the local utility altogether after much tension. It actually cost MGM roughly $87 million to leave (and could cost more over the next 6-7 years as NV Energy evaluates the impact of the costs associated with building generation capacity now no longer needed by MGM) … but in their view, gaining the freedom to manage their own risk and gaining the renewable energy was worth it. (According to a Greentech Media article, they expect the payback to be 6-7 years.)
- They’re willing to work with you. The key to creating the right path forward with your largest customers? Create the package they want WITH them, then go together to the utility commission to make the case for why it makes sense. All three panelists stated that they’re more than willing to spend time with utility commissioners to help them understand the deal and the desire behind it. When asked if they’re really willing to endure a process that can drag out for a couple of years, the panelists responded that they believed their involvement could move the process along faster.
That last point may or may not be true. But here’s my advice:
- Start talking with your commissioners now, sharing stories like this one, to help them understand what large energy consumers want. In other words, grease the skids.
- Reach out to your largest customers – key accounts and the ones just below that – proactively NOW (don’t wait on them to come to you) and ask them what they want from a renewables and energy efficiency perspective.
- Pull together a team of the most creative folks inside your utility to work on options that meet those customers’ needs.
- Go back to the customers with more than one option – all of which speak to what the customers said they wanted that are also workable for you.
- Once you’ve agreed, go see your utility commission together, and, having already given them a preview of these sorts of conversations, work hard to move the approval process quickly.
And as you do all of this, have your most open, innovative, service-oriented people lead the discussions with your customers. In other words, to Rose’s point, don’t send in your people who are fine with the status quo.
Lastly, to the quote at the very beginning of this post: EVs/electrification offer an excellent opportunity for utilities to get creative and work with customers to create a cleaner energy future while also driving revenue. So stop using your competitor’s product and start driving electric cars … and then start working with your customers to do the same!
Image courtesy of Smart Electric Power Alliance