King Abdullah Petroleum Studies and Research Center (KAPSARC): Energy Transitions and Disruptive Customer-Centric Models
16:10 - 16:20 hrs
Energy transitions can disrupt existing business models, potentially resulting in stranded assets. Take the case of electricity distribution companies. These companies typically make large network investments to ensure the reliability of electricity supply for the customers. In a world where distributed energy resources become the norm, customers may opt to use the network less frequently. This would then result in a situation where distribution companies are unable to recover their costs.
Early research at KAPSARC shows that the creation of an innovative insurance market for reliability can help to manage these concerns. In the context of electricity markets, the core idea is for the distribution companies to offer a menu of guaranteed ‘services’ to their customers as opposed to selling kilo-watt hours of electricity. Customers would purchase hours of lighting, cooling, heating, maintenance and reliability services based on their individual preferences and their risk tolerances.