Edison International, a utilities holding company in the US, has launched an energy consultancy arm. ReD Associates, a boutique strategic consultancy, worked with Edison to better understand the needs of potential clients – Fortune 500 companies seeking to reduce costs and bolster their ecological footprint. The partners found that many companies have a fragmented understanding of distributed energy technologies and federal incentives – the new consultancy aims to fill the gap in expertise.
The development of solar power, and its uptake by households, is rapidly transforming the energy sector. More and more relatively self-sustaining households and businesses are selling energy back to the grid, which in turn, is transforming the supply equation for both generators as well as distributors. Distributed energy resources have the potential to create considerable disruption in the market, with energy players seeking to develop creative measures to diversity their offerings – by leveraging their expertise, as well as getting involved in startups in the energy landscape through M&A and partnerships.
One such player is California based Edison International, which was founded in 1886 as Holt & Knupps. Today it is a public utility holding company, owning a number of energy generation, and distribution and energy related subsidiaries. The company, which controls revenues of $11.5 billion and employs a workforce of around 12,700, recently unveiled that it is going to launch its own consulting arm to support companies to leverage new technologies, propositions and incentives in areas including energy efficiency, storage and renewables. The utility giant is one of the first in its segment to make the step towards providing a management and advisory proposition.
“This industry has historically been the ultimate in, “You get it one way – our way – and at one price,” says Theodore F. Craver Junior, Chief Executive of Edison International. “But as customers experience much more customisation in other industries, they start to ask, “Why can’t I have that here?”
The development of the new practice follows a year long process, involving a partnership with ReD Associates, a consulting firm that uses techniques from social sciences, sociology and anthropology, to develop different perspectives on market changes. The research highlighted that corporate energy strategies are changing, with companies more and more looking to cut costs but also to take concrete, visible actions to meet sustainability goals. Many of the businesses, however, did not have the knowledge or understanding of what technologies worked for their often different requirements, to meet both goals.
The new business, which functions separately from the company’s energy businesses, aims to support particularly Fortune 500 companies to, for instance, negotiate contracts to buy energy from a wind farm, or navigate the complex requirements for federal incentives and rules governing installing solar panels or storage equipment.
“Just because you’re comfortable making investments in real estate doesn’t mean you’re comfortable making investments in energy within your assets,” says Louis Schotsky, Vice President for investments at Equity Residential, and a participant in ReD’s research. “It’s really, really hard to find people who can take a broad perspective on energy and come back to you with an even somewhat unbiased recommendation around what’s best for your property.”
The new offering from Edison aims to fill a gap in the market, as well as diversify the company’s offerings in a time of potential disruptive change within the utilities market. The development of an internal consulting firm, provides the company with better insights into future changes as it continues to acquire other companies, including, most recently, a rooftop solar installer and a business that helps large organisations buy clean energy.