The energy revolution is upon us. Ohio is in a period of unmatched change in the way we produce, use and think about energy. Why now? What does it mean to us? And are we poised to take advantage of this opportunity?
The change in the energy space over the past eight years is frankly mind blowing. The Ohio General Assembly passed electric deregulation in 1999 but it was the 2009 economic crisis driving energy prices to historic low levels that changed the landscape in a meaningful way. Customers began leaving utility generation supply in droves in favor of lower cost competitive suppliers. At about this same time, the largest natural gas shale deposits in the world in the Marcellus and Utica regions were discovered. This new energy source created new market dynamics altering how we think about energy in Ohio.
In 2009, there were very few deregulated electricity offerings as only a couple of suppliers were actively seeking customers. Today, Ohio is one of the most robust electricity markets in the country with hundreds of licensed brokers, dozens of active suppliers, prolific governmental aggregation buying groups and consumer advocacy groups becoming more and more influential in energy policy. Now over 70% of all energy delivered in Ohio is being sourced by a competitive supplier and customers are able to find the best value in the market like never before.
There can be casualties in a paradigm shift and in this transition the casualties are the legacy coal fired and nuclear powered generators owned by the utilities. While policy makers and the utilities figure out what to do with these generation assets that can’t produce earnings, independent power plant developers have moved in to provide a market solution. Not since the 1950’s have more power plants been planned and built in Ohio. In fact the new generation, which will provide power at nearly half the cost of legacy plants, will be enough to power 2x’s the number of residents living in Ohio.
In addition, renewable energy continues to make a move in affordability as prices to produce photovoltaic panels have dropped by nearly 70% and costs to generate wind decline. These falling costs are mainly attributed to reductions in the components used to make the energy such as solar panels, racking systems and turbines. In certain applications, these technologies no longer need subsidies to compete with traditional fossil fuel generation.
Along with these major fundamental market changes customers are becoming more sophisticated and technology driven. Most customers have now been actively engaged in procuring electricity for eight years and along the way have increased their level of understanding. At the same time, they have become more technically savvy. The result is a customer that demands technology solutions from energy professionals participating in a dynamic marketplace. This is a far cry from previous decades where customers’ main energy strategy was paying the electric bill on time.
Are we ready for this opportunity? The results from JobsOhio would indicate we are ready. In 2011, JobsOhio reported only a handful of companies in the petrochemical value chain with operations in Ohio. This chain includes value driven from energy in its raw form all the way to consumable products such as gasoline, industrial chemicals and polymers. Today, dozens of companies from pipelines, producers, coating companies and refiners have invested in Ohio to the tune of $30 billion and tens of thousands of new jobs.
Through the perfect storm of price collapse, exploration and production, and technology the energy market in Ohio has changed forever. Our awareness of how we consume energy will become more transparent with the implementation of technology and the solutions provided by energy professionals will become more advanced. The next five years will likely look much different than today and it will be interesting to watch how customers become more and more involved with the energy they consume. For most Ohioans, the energy revolution will mean lower prices, more options and greater technology innovation.