Does the Real Energy Transition Start Now? — Reflections from EEI 2025
Clarum Advisors
June 5, 2025
This week the yearly EEI convention took place in New Orleans, with about 1000 utility and energy executives, customers, service providers and others in the ecosystem attending presentations, fire-side chats, and roundtables. This is not a write-up of the topics discussed and opinions voiced, since many others have done that already. This is a synopsis of where we are as an industry, what we have heard in the recent months, including this week in New Orleans, and what lays ahead of us. Enjoy the read and please send us your feedback!
Where are we in the energy transition?
We have been in the Energy Transition for about 15 years, with the first smart metering rollouts in 2010-2011. You could argue even longer if you go back to 2000 which marked the beginning of significant growth of rooftop solar in the US, or even the mid-1980’s when the first utility-scale solar plants were installed. But smart metering and DER really changed the dumb mechanical grid into a smart two-way power flow system as we know it today (The Energy Cloud).
Since then, a lot has changed in the energy and utilities industry, some would describe it as revolutionary. And although, policies, regulations, customer demands, energy products and services, and utilities operations and infrastructure, have changed, the fundamentals of our regulatory frameworks (in large part rate-based), the functioning of energy markets, the main market players, pricing mechanisms, and structures such as the process for permitting and building out infrastructure have not changed fundamentally.
The energy revolution starts now
We are convinced that this will now happen because of two revolutionary developments which will change the fundamentals of our industry going forward.
The first development is an increase in electricity demand which we haven’t seen in decades, driven by ongoing electrification, industry onshoring and most importantly, build-out of data centers and hyperscalers. This last factor is creating a completely new customer segment for utilities, with demands that the industry never has dealt with before. Energy systems, including supply chains, human resource allocation, wholesale markets, generation, transmission and distribution systems, interconnections, regulations and policy will all have to change significantly in response to this momentous change in demand.
The second development, how can it not be, is Artificial Intelligence (ironically, the main driver for the first development). Utilities and their ecosystem for decades have invested heavily in data, data infrastructure and new applications to modernize and digitize their operations and customer engagement—but to be honest, customer engagement, service and products have only marginally changed. Utilities are still struggling to pull data together across all the parts of their organizations and ecosystems. As a result, solution providers face the same issue—solving business problems with partial, fragmented and incomplete data hidden behind utilities’ organizational and technological silos. AI has the power to radically change this dynamic, truly revolutionizing the utility business through data and technology.
“Speed to Power” was the mantra at this year’s EEI conference. But presentations by both utilities and hyperscalers at the event left a fundamental question unanswered: Will utilities, hindered by established governance structure, processes and procedures, both internal and external (e.g., regulatory, permitting), be able to serve this client segment fast enough and well enough to meet the need?
Tech companies’ needs for power present challenges on a scale the energy industry has not seen before. It takes time to build out utility-scale generation, transmission and distribution infrastructure. Supply chain challenges, years-long equipment backlogs, time-consuming and uncertain permitting and regulatory processes, and slow-moving internal governance processes pose huge challenges for utilities in achieving Speed to Power.
While AI holds the potential to increase Speed to Power, historically our industry has been slow to adapt and scale new technologies, and our expectation is that it will be no different with AI. Not because utilities don’t want it, but because the regulatory rate base construct (who pays for these investments) will be a tremendous mountain to climb, especially given the renewed focus of regulators on cost, reliability and resiliency.
Where do we go from here?
Our prediction is that only a handful of utilities will be ready in time to serve the burgeoning demand by this new customer segment. This leaves a large demand gap to be filled by new entrants or the hyper scalers themselves. Utilities with innovative business models will help fill the void, along with new behind-the-meter infrastructure and VPP players. New developers will become utilities, but with a different mix of generation assets to serve this new customer base. These new market entrants will partner with hyperscalers and data center developers to move faster, implementing infrastructure and generation development at speed. These and other market entrants addressing the delta between utility capabilities and market demand will drive transformation on a scale we have not seen before, and will truly be revolutionary.
In our next article, we will deep-dive into the new AI-powered market entrants, technologies and partnerships that will close this demand gap. Who wants to play?