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low risk market transformation

Market Transformation: solar power

As incumbent utilities grapple with the daunting challenge of reinventing themselves, the pioneering work at Sacramento Municipal Utility District (SMUD) provides a credible foundation from which to construct a new-age road map for utilities going forward.

The goal in this effort was to stimulate an important market transformation whereby solar power could become commercially viable.

Methods and strategies employed by SMUD can help utilities of all types successfully navigate this disruptive transition to a clean energy future.

On June 6, 1989, Sacramento became the first, and only, community in the world to shutter a nuclear power plant by public vote. The plant was closed during an era of enormous concern about nuclear safety and economics.

Closing the Rancho Seco Nuclear Plant initially forced SMUD to buy more than half its power from neighboring utilities. SMUD needed to replace the power generated at Rancho Seco and management ultimately decided to pursue a regional transformation to renewable energy, primarily solar.

The challenge with clean-energy market transformation is getting people who are primarily risk averse to adopt new innovations. The mainstream population believes that most new technologies are unproven and risky. Properly designed customer-alignment strategies will overcome adopter hesitancy and accelerate technology adoption.

The primary alignment task for SMUD was to reduce perceived risk so that mainstream customers would feel comfortable adopting solar.

Warren Schirtzinger of High Tech Strategies was selected as a special advisor and consultant to the Supervisor of Distributed Technologies at SMUD. In this assignment he provided the design and implementation of a multi-phase customer research program, which allowed him to provide a comprehensive assessment of SMUD’s residential solar program. Warren also guided development of the strategy and framework needed to align SMUD’s program with mainstream homeowners in the Sacramento area.

Mainstream Whole Product

The primary focus of this transition strategy was to align SMUD’s solar program with the needs mainstream ratepayers. Through qualitative research, Warren and the SMUD team were able to fully understand the personal needs, requirements and motivations of SMUD’s mainstream audience. Through understanding the pragmatic and risk-averse nature of the mainstream buyer, SMUD was able to design an effective transformation strategy that leveraged all of the inherent advantages of an electric utility. This included creating a compelling whole product for mainstream customers by offering a complete, standardized solar-panel package while simplifying both interconnection and permitting.

For over a decade, the SMUD solar program was at the forefront of large-scale implementation of solar power and has served as a successful model both nationally and internationally. During that period, the program won a number of superlative awards presented by:

  • the California Municipal Utilities Association
  • the Interstate Renewable Energy Council
  • the Solar Energy Industries Association
  • the Utility PhotoVoltaic Group/Solar Electric Power Association.

The SMUD solar program also received the prestigious International Energy Globe Award from Austria.

Early in the program, SMUD had about half of all grid connected solar in U.S. and well over 1000 mainstream residential participants. SMUD’s transformational program directly led to the California Solar Initiative (CSI), and the CSI has in turn led the entire US forward toward a clean energy future.