Abundance vs Scarcity Thinking

“A source of increasing tension is the difference in mindset between the traditional industry scarcity mindset versus customers and new business entities with an abundance mindset.”

Scarcity thinking has permeated much of the electricity industry’s regulation and decision-making methods that are now constraining the transition to the second S-curve discussed in “A Gambit for Grid 2035.” As such, we need to begin shifting our mental models from a zero-sum constraint-based approach to a paradigm that recognizes the abundance that is underway.

Recent modelling by CSIRO, ClimateWorks Australia, and The Brattle Group for Transgrid’s “Energy Vision” compared five potential scenarios on emissions outcomes, total system costs, and average bills. Amongst these scenarios, the high distributed energy resources future achieved zero emissions by 2050 with the lowest average annual consumer costs. This is inclusive of electricity bills and the costs of consumer investment in solar generation and energy storage.  Similarly, Southern California Edison’s “Pathway 2045” study found the total cost of energy for the average consumer is expected to be reduced by 30%, when considering the costs of fuel, the increase in load growth, and the investments required.

These studies recognize the long-term trends for clean energy technologies, transportation electrification advancements both benefiting from the underlying exponential technological innovation driving lower costs and improved performance. Combined with business innovation, these trends will enable an abundant clean energy future and that continue to shape the requirements of the next generation of electric system.  Unsurprisingly, the technology industry typically views similar opportunities from an abundance mindset. That is, where the pie gets bigger, with opportunities for all to share increasingly. As opposed to an existing, fixed pie to fight over who gets which slice.

The contrast between the two mental models is stark:

Unfortunately, much of the industry evolution over the past 30 years since deregulation, is fighting over who gets what piece of the fixed or possibly shrinking pie. However, it’s becoming clearer with a number of the studies and trends that the pie is getting bigger.  So, it is time to think differently about the existing constraints regarding roles and responsibilities of various entities. For example, there is an opportunity today to think differently about what utilities may be able to do and who they may partner.

We’re already seeing that some of the classic ideas of who’s regulated, who’s unregulated, who should do what, starting to blur as people recognize that many of the new business opportunities require collaboration and business partnerships. This is increasingly important to satisfy what customers need and want. Also, we are in the midst of a significant transformation in this industry and will need to be adaptable to the changes and opportunities that emerge. This means there’s going to need to be greater opportunities to collaborate, to partner, to be able to satisfy customers’ needs and be able to engage customers as co-creators in this new future.

This requires changes in regulatory approach to enable greater flexibility for utilities and others to evolve to the benefit for customers. As described in PEI’s Gambit paper, “As seen in the telecom industry responding to similar structural changes in the 1990s and 2000s, regulatory frameworks that enable entities to pursue business models that traverse traditional boundaries have proven to be more successful when the industry is transforming from supply orientation to demand orientation. The anticipated growth of electrification and abundant, low/no marginal cost renewable energy and storage by 2035 will accelerate this shift to customer-centric economics already well underway.


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