The rise of the entrepreneurial utility
The key to managing affordability and unlocking the energy transition—including the move to renewable energy.
By Chris Richardson, Partner, Realize 2050
The U.S. utility sector stands at a crossroads. On the one hand, the sector faces the most significant load growth and affordability pressures in most of our lifetimes. On the other hand, shrinking federal and even state budgets to support low-cost power and grid innovation leaves utilities with less room to maneuver.
Meeting that challenge requires a fundamentally different, entrepreneurial approach. It calls for problem-driven innovation, rapid testing and iteration, and creativity under real constraints. This is the only viable response to structural pressures reshaping the entire sector.
For utilities built on a culture of 99.999 percent reliability, innovation carries real risk. Still, the bigger danger may be stagnation. Only through calculated innovation tied to measurable cost and reliability outcomes can utilities meet the demands of this moment.
The affordability crisis driving change
Affordability is the leading topic in the boardrooms of many utilities today, and there are many cost pressures driving that dynamic. Despite many utilities’ statements about the potential for data center loads to reduce rates, most new grid-connected data centers will require significant new transmission and distribution investment. Prices for transformers, cables, and other core equipment have doubled in just a few years. Extreme weather requires hardening, which requires money.
In some coastal states, electricity rates are now so high that the operating costs of an EV or a building heat pump can exceed those of fossil-based alternatives. These facts illustrate how affordability has become a constraint as binding as reliability has always been.
Traditional reflexes to address decarbonization, reliability, and resilience through higher capital spending will be met with skepticism from regulators. At current trajectories, electricity costs could become a top political issue within a single election cycle.
Decarbonization goals require complex tradeoffs
Decarbonization mandates or commitments will further complicate the affordability tradeoffs. Across the country, utilities and their regulators are setting aggressive timelines to decarbonize the grid. Xcel Energy plans to cut carbon emissions 80 percent by 2030. The Los Angeles Department of Water and Power aims to deliver 100 percent carbon-free energy by 2035. Pacific Gas and Electric targets net zero by 2040. These commitments, often forged in collaboration with public utility commissions, are reshaping investment priorities and risk frameworks.
While renewables are now the cheapest forms of generation, reaching these goals will require significant new infrastructure to connect remote clean energy resources to growing load centers. The technologies that make such a system reliable, such as long-duration energy storage, Distributed Energy Resource Management Systems (DERMS), and high-temperature superconductors, will require upfront premiums before ratepayers see the long-term benefits.
What entrepreneurial thinking looks like in a utility context
Entrepreneurship does not mean behaving like a startup. Utilities have obligations startups do not: reliability, equity, and public accountability. But three disciplines from the entrepreneurial world translate directly.
- Problem-led innovation: The most effective entrepreneurs start with tightly defined problems. In the utility space, this means articulating system constraints with precision, such as interconnection backlogs, wildfire risks, or load growth bottlenecks, and aligning innovation efforts around them. PG&E’s recent R&D strategy work, supported by Realize 2050, illustrates this approach and shows how clarity of problem definition accelerates solution development. (see PG&E’s R&D Strategy Report)
- Rapid evaluation and iteration: The current pilot process often moves at a glacial pace, and many early partnerships never seem to escape “pilot purgatory.” (see Realize 2050’s white paper, Innovate, Procure, Scale). Utilities need pathways for fast, low-risk testing using sandboxes, microgrids, and digital twins that reduce evaluation cycles from years to months. Faster iteration avoids locking in unnecessary costs and enables earlier scaling of successful solutions.
- Creativity under constraints: Startups thrive under scarcity. Utilities now face their own version of it. Constraints, when treated as catalysts, force prioritization and unlock efficiency gains that delay or even avoid costly system upgrades. The lesson here is that fiscal pressure can drive smarter, leaner innovation if utilities embrace it strategically.
AI as the most credible path to doing more with less
The grid’s complexity is reaching a point where human planning alone cannot keep up. Millions of distributed assets, intermittent generation, and rapidly changing load patterns exceed what spreadsheets and static models can manage.
As Realize 2050 highlights in its report on AI for Utility Leaders, AI will not replace human operators anytime soon. The near-term opportunity looks more like Garry Kasparov’s “centaur systems,” where human judgment combines with machine precision. But as autonomy levels rise, economics change dramatically. Shorter permitting timelines, real-time
asset optimization, and predictive maintenance enabled by AI
all bend the cost curve rather than steepen it.
In a world of constraints, AI is the most credible pathway to doing more with less.
The opportunity ahead
Consider a thought exercise: imagine if a utility’s total budget were cut by 10 percent, or 20 percent, or even 50 percent. What operational changes would be required to maintain reliability and affordability under those constraints? We are unlikely to see 50 percent cuts in a world of massive load growth, but the exercise forces a clearer understanding of which activities drive the most value, which can be automated, and where legacy processes create unnecessary costs.
The path forward is not abstract. It looks like utilities defining system constraints with precision, creating rapid pathways for testing solutions, embedding AI into planning and operations, and using financial discipline to prioritize investments that lower long-term costs.
Do this well, and utilities become the pivotal actors of the energy transition’s next phase. Fail, and the sector faces rising costs, political backlash, and a slowing transition just as climate and electrification pressures mount.
The choice is not between innovation and stability. It is between entrepreneurial innovation that delivers both affordability and reliability, or mounting crises that offer neither.
Chris Richardson is a partner at Realize 2050 (www.realize2050.com) which works to make utilities and other incumbents think like entrepreneurs. Previously, he was a partner with ADL Ventures, a venture development consultancy; executive director and founder of Uptake Alliance, a NYSERDA-funded climate tech venture development program; and co-founder of The EV Button, a Department of Energy-funded EV infrastructure company that leverages underutilized infrastructure such as arenas to accelerate fleet electrification.
A version of this article originally appeared in Latitude Media (www.latitudemedia.com).
Q 2026
