Energy in 2019: what commercial & industrial customers need to know

Jan 17

Energy in 2019: what commercial industrial customers need to know

At the end of 2018, we published an article highlighting the major energy trends for the past year. We are already tracking interesting developments for 2019 that may impact commercial industrial customers (so-called C&I customers). Below, we review our observations about the year ahead and then suggest how these trends may impact C&I customers.

1. Uncertainty.

Government shutdown

The year 2019 began with complexity and uncertainty in various areas. The government shutdown is impacting businesses in various ways. While hospitals will continue to receive Medicare and Medicaid reimbursements, there may be other ripple effects on the health care industry from the shutdown. For example, Healthpayer Intelligence reports that furloughed government workers may end up deferring routine care for chronic diseases if they are unable to pay for out-of-pocket expenses. While many the Department of Education and the National Institutes of Health remain unaffected, the American Council on Education reports:

funding bills for the National Science Foundation (NSF), the National Aeronautics and Space Administration, the National Oceanic and Atmospheric Administration, and the National Endowment for the Humanities have not been signed into law and so those agencies effectively are closed.

We do not know the full  impact of  the government shutdown on C&I customer energy projects. Customers may be distracted. You may have to plan for and manage issues related to the shutdown. Energy, finance and procurement professionals juggle numerous demands. You don’t need another distraction. 

Commercial industrial customers face complex decision making environments

Energy markets

Notwithstanding politics, energy markets have been largely un-predictable at the end of 2018 and at the start of 2019. C&I customers should get re-acquainted with volatility in energy markets, as we reported at both the start and the end of 2018.

We may sound like a broken record. We will say it again. It is vital for customers to plan for and prepare to navigate volatility. 

Regulatory landscape

The regulatory landscape is also in flux. The federal government is rolling back environmental regulation. Some city and state governments are stepping in to fill the federal government void on matters of sustainability and clean energy. In the year ahead, Governor Cuomo of New York plans to accelerate adoption of renewable and clean energy with his Green New Deal. Minnesota and Massachusetts are also engaging in efforts to step up clean energy regulation.

C&I customers with facilities in more than one state will find they are challenged to track regulatory and policy movements in all relevant jurisdictions. 

2. Power/fuels/utilities will continue to transform, sometimes at a dizzying pace.

Both utilities and customers will continue to rely largely on natural gas for electricity supply and, to a significant extent, heating fuel. Energy storage will likely play a modestly more significant role, particularly in states (California, New York) where regulators are transforming the grid. Renewable energy investments will continue to grow at the utility-scale. Take a look at this Utility Dive article on the Ten Trends Shaping the Electric Power Sector in 2019.

Green energy investments will continue in 2019

Utilities and regulators aren’t the only players investing in large-scale renewable energy. In the year 2018, corporations made significant investments in long term power purchase agreements and on-site renewable energy.

Look for opportunities to invest in clean energy and energy efficiency. Exposure to non-fossil, non-gas resources will help C&I customers dampen their exposure to volatile power and gas markets (see 1,  above). Don’t count out energy efficiency investments. MWh data and analytics have identified low-cost, hard-to-find, high value opportunities to consume fewer kWhs.

Learn more about low-cost, hard-to-find energy improvements

Finally, energy providers, utilities and businesses are employing business models that help customers exploit the clean and green resource (see 3, below). 

3. New business models impact commercial industrial customers.

Utilities, energy companies, multi-national power and gas corporations, state and local regulators continue to recognize and acknowledge the importance of C&I customers to a transformed utility industry. Notably, stakeholders have recently honed in on the role of C&I customers in the utility value chain. This observation may sound absurd. Of course customers are essential to an operating power sector! However, until recently many stakeholders either didn’t know how to involve C&I customers, or didn’t try very hard to do so. In 2019, we will see a greater emphasis on helping C&I customers make sense of the transforming power sector landscape. As a result, new C&I customer-focused business models will emerge. Look for simpler, more customer-friendly financing efforts and improved transparency. For example, Energy as a Service offerings emphasize transparency and simplicity in serving larger customers.

In 2019, C&I customers will find that there are new models for investing in energy efficiency and renewable energy that are more responsive to the specific needs of these customers. We always recommend using forward-looking data and information to ensure that you receive the business outcomes you expect. 

 

 

 

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