The Future of Utility Programs: Electrification, AI, and Growing Demand

After a year of billion-dollar weather events and increased energy demand nationwide, ICF surveyed 100 utility program leaders to understand how they are rethinking their strategies and seizing opportunities in the industry. The survey also explores current challenges with capacity,
plans for electrification and technology adoption. Here are the top three takeaways:

Utilities recognize the evolving customer program landscape
Utility customer programs are facing a moment of great change and opportunity. They need to be more flexible and predictable in the face of rapid demand growth, electrification, aging infrastructure, and new technology. Utility leaders view grid modernization (57%), affordability (51%), and enhanced reliability (49%) as their top goals to achieve through customer programs. Nearly half of respondents (45%) view decarbonization as a top goal.

Customer support is essential to meeting these goals, and these programs must be affordable to secure customer buy-in. Respondents agreed that customer programs must include financing options to effectively promote the adoption of reliable, clean energy. That makes affordability a priority for utility program leaders. However, 93% admit that current support falls short. There is more work to be done to prioritize affordability and make customer participation more accessible.

Utilities address the growing demand challenge
AI, data centers, electric vehicles, heat pumps, and other electrification are leading to increased demand. ICF expects electricity usage to grow by 9% by 2028 and 18% by 2033. That could drive up the amount utilities pay for electricity by 19% by 2028. Over two-thirds (68%) of utility leaders say increasing electrification is a moderate or significant challenge. They’ll rely on energy efficiency programs and demand response strategies to meet demand and stay ahead of rising energy costs.

Currently, 63% of utility leaders deploy demand response strategies to meet capacity demands. Nearly all (98%) respondents said that evolving their energy efficiency programs has become essential to realizing a return on investment. Yet, financing energy efficiency and load management measures are the most cited challenge (53%) in utilities’ customer programs that hold them back from reaching their goals.

AI is a game-changer for utilities
With the rise of new generative AI models and the data centers needed to power them, utilities aren’t just managing demand growth from AI but simultaneously leveraging the tool. Sixty-five percent of utility leaders surveyed described AI as a “game-changer” and most respondents also indicated they are integrating the technology into at least one aspect of their businesses. 

Top use cases for utilities include the identification of customer segments and targets (48%); planning programs, such as digital twins to predict impact (45%); monitoring energy consumption (43%); and dynamic pricing/demand response (41%). The continued integration of this cutting edge technology has strong potential to improve the customer experience and help meet demands.

From navigating ever-evolving energy needs to the introduction of emerging technologies, one aspect of utility work remains constant: customer connection. Utility leaders will continue to evolve in this changing industry, utilizing technology and new strategies to build resilience and stronger communities.