After a relentless storm of bad news about the climate — record-shattering heat, monster hurricanes, raging wildfires, and no political will to do anything about it — the world seems to be having a moment. In the run-up to the Paris climate talks, more than 160 countries have put forward targets that could support a worldwide agreement to cut greenhouse gas emissions.
For the first time in years, along with all that carbon, there’s some hope in the air, as the world’s biggest polluters on Monday declared they were now supporting demands from African countries to adopt more ambitious goals to limit global warming.
When we think about the players that would turn a carbon pact into reality, thoughts usually turn to companies that are developing futuristic hardware. One case in point is Tesla Energy (TSLA), which just took 38,000 pre-orders for its residential energy storage battery this year.
But the consumer market for clean technology solutions is still niche and, for the most part, restricted to people who can afford it. Make no mistake: these technologies are essential to a clean energy future. But hardware is slow to scale. The utilities we have today — and the policies that regulate them — are the fastest way to make sweeping, immediate cuts to carbon pollution.
Globally, the electricity and heat production industry is the largest source of greenhouse gas emissions (though in some areas, like the Northeastern U.S., transportation takes the top spot). With a built-in customer base of billions, utilities have more potential than any other industry to effect change on a timescale that matters.
It’s telling that when President Obama wanted to show the world that America was serious about reducing its emissions, he rolled out the Clean Power Plan — a signature initiative that’s as much about encouraging utilities to embrace energy innovation as it is about any particular climate target or technology.
Creating a utility-powered clean energy future won’t be easy. The American power grid still wastes more energy than it uses. And with 1,100 electric distribution companies and 1,600 local natural gas delivery companies in the U.S. alone, building momentum is a huge challenge. The U.S. needs to dramatically increase energy productivity, and fast.
Pioneering utilities have proven that change is possible, though. For years, the world has watched New York craft and commit to its Reforming the Energy Vision (REV) initiative. Its central tenet holds that utilities must transform from monoliths that produce and sell a single commodity to market makers that connect customers to an ever-broadening spectrum of services, from solar and storage to efficiency plans and electric vehicles.
In the long term, REV will turn New York power companies into platforms not unlike what Amazon has done with retail (AMZN) or Airbnb with hospitality — using software to make personalized recommendations and connect you to whatever clean energy products you need. National Grid created an entire division to pilot programs that support resilient microgrids, affordable community solar, and smart grid projects that empower its customers.
Ambitious reforms abound elsewhere. Californian policymakers are transitioning customers from flat-rate energy pricing to dynamic schemes that reflect the real-time costs of producing power. An energy provider in Texas, TXU Energy, made headlines recently for “selling” nighttime power for free. The goal is to make energy demand flexible. Utilities are creating financial incentives for people to use energy when it’s abundant and save energy when it’s scarce — an essential prerequisite for deploying intermittent power sources like solar and wind.
And, increasingly, utilities are leading the charge to deploy renewables. The number of utility-run community solar projects grew 64 percent last year. More power companies are leasing rooftop panels directly to their customers. For the first time in history, millions of homes and businesses have the chance to choose zero-carbon electricity.
That’s far from enough. We need a power grid that doesn’t just support clean energy technologies, but aggressively scales them up. The success of solar installers, smart thermostats, and electric cars; of climate initiatives and the countries that lead them; and ultimately the most important environmental challenge in a generation —clean energy for all — will depend in no small part on the energy companies that, only a decade ago, were primarily focused on maintaining poles and wires.
There won’t be any utility delegates in Paris this year. But they’re indispensable in whatever comes next. Governments worldwide will need to partner with utilities in a way that lets them throw their full weight into building a cleaner, more affordable, more resilient energy future — even as they continue to deliver reliable, safe energy to a greater number of people worldwide.
It’s a big task. But we can’t afford to fail.
Alex Laskey is president and co-founder of Opower, an enterprise software company that provides cloud-based software to the utility industry and their customers. Terry Sobolewski is the chief customer officer of National Grid U.S., an energy company that serves New England and New York.
