The electric utility sector is navigating significant challenges, driven largely by extreme weather events and increasing energy needs stemming from technologies like AI and electrification. To better understand these hurdles, ICF recently surveyed 100 utility program leaders, focusing on issues related to capacity, plans for electrification, and embracing new technologies. The main takeaway from the survey is the urgent need to adapt programs to help utilities deliver clean, reliable, and affordable energy.
Customer Programs: Challenges and Chances
Utility customer programs are entering a crucial phase characterized by both challenges and opportunities. As demand surges, these programs must become more adaptable and consistent in light of issues like aging infrastructure and technological advancements. Currently, utility leaders prioritize grid modernization (57%), affordability (51%), and enhanced reliability (49%) as key objectives for customer programs, with nearly half (45%) also placing a strong emphasis on decarbonization.
Achieving these aims hinges on effective customer support, which must also be affordable to encourage participation. Many leaders agree that offering financing options is essential for promoting the adoption of reliable and clean energy solutions. However, a staggering 93% acknowledged that their existing support systems are inadequate. There’s considerable effort required to enhance affordability and accessibility for customers.
Utilities are also recognizing the need to extend their outreach efforts to ensure that every community can benefit and contribute to wider energy goals. Building trust through responsive and relatable communication is paramount for enhancing outreach regarding new programs and financing options.
Responding to Rising Demand
Electricity demand is increasing, driven by factors like AI, data centers, electric vehicles, and heat pumps. ICF forecasts a 9% rise in electricity usage by 2028 and an 18% increase by 2033, which could raise utilities’ electricity costs by 19% in the same period. Two-thirds (68%) of utility leaders consider rising electrification a moderate to significant challenge. To address this, they plan to rely on energy efficiency programs and demand response strategies that help manage growing demand and offset rising costs.
Currently, 63% of utility leaders employ demand response strategies to handle these challenges, while nearly all (98%) feel that modernizing energy efficiency programs is critical for achieving favorable returns on investment. Nonetheless, financing issues and other barriers in energy efficiency and load management programs remain the most significant hurdles (53%) preventing them from meeting their goals.
These results demonstrate the vital need for integrated demand-side management solutions that consider energy efficiency, demand response, and distributed energy resources (DERs) to maintain grid stability and address customer needs. Technology is poised to play an essential role in providing clean and affordable energy, with 61% of utility leaders feeling mostly prepared to incorporate customer programs involving DERs for demand response.
Customers are also adapting to these changes. A recent ICF survey indicates that half of energy customers plan to enhance their home energy efficiency within the next three to five years. Alongside this, they support home electrification and exhibit a familiarity with demand response programs.
To keep pace with this trend, 64% of utility leaders are utilizing distributed energy resource management systems (DERMS) for effective management. While 46% still depend on manual tracking, an equal number (46%) are employing smart meters to oversee and manage energy consumption. Notably, 52% of leaders report a split between automated and manual efforts in load management, grid operations, and outage responses.
Technology will undoubtedly shape the future of demand response and energy efficiency programs. Among the variety of technologies, one stands out as a particularly effective solution.
The Impact of AI
As new generative AI models develop, utilities are not only addressing the rising demand from AI but also utilizing it to enhance their services. Every respondent in the survey indicated they are leveraging AI in at least one aspect of their customer programs, with 65% describing it as a “game-changer” for their operations.
Key applications of AI in utilities include identifying customer segments (48%), planning programs like digital twins to forecast impacts (45%), monitoring energy use (43%), and implementing dynamic pricing or demand response strategies (41%). The integration of AI is enabling utilities to adopt more complex technologies that improve customer experiences and manage increasing demand effectively.
In conclusion, the findings from ICF’s survey highlight the importance of developing innovative and adaptable customer programs for future success. Utility leaders understand the pressing need to evolve their offerings to better support customer involvement and meet overarching business goals. Technological solutions like AI and DERMS are vital tools in this journey.
This survey provides utility leaders with a guiding framework to tackle the upcoming challenges and opportunities. By focusing on financial accessibility, load management, energy affordability, and technology integration, utilities can build more resilient and customer-driven programs that contribute to a clean, reliable, and affordable energy landscape.