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There is a small but growing number of people looking at going completely off-grid by adopting distributed generation and storage technologies to power their home or business. Making the decision to disconnect from the grid is a big step. What if the storage unit fails, or a storm damages the solar panels? How long would a customer be without power? Applying insurance principles may help alleviate this concern while generating new revenue streams for Utilities.

The insurance industry makes money from people willing to pay what they consider to be a reasonable premium to mitigate risk. Most people will never require an ambulance, yet many pay for ambulance cover. Most will never experience a house fire, have a car accident, or be made redundant, but people pay insurance to cover the ‘what if’.

Every person’s situation is different, as is their appetite for risk. Insurance allows people to make choices based on their individual circumstances.

For customers going ‘off-grid’, a Utility could remove the standing network charges, in its place the customer can choose to take up insurance. The insurance would cover the base costs of remaining connected to the grid and allow them to access power a certain number of times per year. Basic packages through to premium could be offered to allow for different levels of network services.

Customers could, of course, decide not to take up the insurance, but should they require network services the customer is exposed to the market price.

I would imagine, so long as the premium is reasonable, most people trying to exit the grid would pay for this insurance to give them peace of mind.

For a Utility, this does not only create a new revenue stream but helps them maintain a relationship with a customer that may otherwise have been lost to them.

Could the principles of insurance be applied to utility services?