If there is one thing you can predict about the energy industry, it is that the industry is unpredictable and has seen more change over the past decade than the previous half century.
With American gas and oil production up, renewable energy becoming more practical and affordable and utilities expanding their offering and becoming more than energy providers, the next five years will be interesting ones for the industry.
Production is up – and prices are down
Thanks to unconventional sources of oil and gas, such as the shale fields, American production has exceeded 10 million barrels per day since the last peak, all the way back in 1970. This puts America third in world production, just behind Saudi Arabia at 10.6 million barrels per day and Russia at 11 million per day. By the end of next year, the U.S. could exceed 12 million barrels daily. Meanwhile, Saudi Arabia and Russia have cut back production in an effort to stabilize oil prices.
Imports have dropped from 60 percent of demand to 20 percent, and the U.S. could be a net exporter by 2020 – as it already is for natural gas.
After a brief May surge, oil prices are down to $66 a barrel. Saudi Arabia and Russia have hinted they may drop their self-imposed supply caps as they try to ease concerns about reduced production in Venezuela and Iranian sanctions. At the same time, experts see that $60 to $70 range as the “sweet spot” that benefits both producers and users – good news for the industry.
Renewables continue to grow
The future is bright for renewable energy. Solar panel prices have seen a sustained drop – more than 70 percent since 2009, and small-scale, on-site power sources, or distributed generation systems, have seen a dramatic increase in interest and implementation, especially in the solar energy field, increasing globally by 50 percent in 2016. In addition, solar energy has become so affordable as to be a practical alternative – the cost per watt has come down from $76.67 in 1977 to 60 cents.
Solar energy isn’t the only renewable source that’s seeing a boost in popularity driven by affordability. Strides in turbine technology have reduced the cost of wind energy, allowing utilities to enjoy affordable rates through 20 to 30 year contracts. The costs have dropped from nearly $90/MWh in 2009 to $20/MWh now.
Millennials, who have surpassed Baby Boomers as the largest generation represented in the U.S. workforce, want clean energy – 56 percent say utilizing clean energy sources is important, and 86 percent think the government should establish a plan for energy strategy. Millennials spend their money with companies who demonstrate similar values, and Millennials have been dubbed Green Champions..
An Accenture energy consumer survey shows that 56 percent of Millennials want to incorporate solar panels into their energy sources. Additionally, more than 60 percent will pay for a smart grid to integrate clean energy, with 30 percent identifying environmental benefits as among the most important features of a smart grid.
Forward-looking utilities expand offerings
The idea that utility companies should expand their offerings past simply supplying electricity and natural gas isn’t a new one. For years, industry leaders have known that they must diversify to thrive.
Strategic alliances have generated interest since the early days of energy services because they have been profitable. Studies have shown customers want information and choice – and when a utility offers customers programs or services in which they can chose to participate, their satisfaction increases. Customer satisfaction and engagement have been shown to increase ROI – and customer trust. Customers want a recommendation from a trusted source, which has led to a proliferation of contractor referral sites.
A partnership with HomeServe USA enables utilities to offer their customers valuable repair plans for electric service line, water heaters and other home systems. HomeServe can provide protection to utility customers who aren’t prepared for an emergency repair and increase customer satisfaction at the same time – at no cost to partner utilities.
To learn more about how a partnership can benefit utilities and their customers, contact us.