Exelon SWOT and PESTLE Analysis

Strength

1.Strong presence across the energy value chain: The energy value chain consists of four stages: power generation, competitive energy sales, transmission and delivery. Exelon's robust presence across all these stages gives it a competitive advantage. The electric and natural gas power transmission utilities serve 10 million customers (8.9 million electric utility customers, 1.3 million natural gas utility customers and 2 million retail customers as of early 2018). Generation capacity of Exelon is 32700 Megawatts of solar, wind, gas, hydroelectric and nuclear power. The Constellation business unit is involved in the selling of energy products and services to 2 million residential, public sector and business customers, including many Fortune 100 companies. Exelon Corporation produces 20,300 megawatts of nuclear energy. With a strong presence in 48 States in the United States of America, Exelon is America’s #1 zero-carbon nuclear energy provider and featured in Fortune magazine’s 2017 list of the “World’s Most Admired Companies.” This energy conglomerate is the number one competitive energy supplier, boasting of the cleanest and lowest-cost power generation fleets and one of the largest retail customer bases in America. The Company is committed to pursuing sustainable growth in competitive markets through innovation and efficiency. Exelon featured as the #1 utility company on the FORTUNE 500 (#89 overall in 2017 rankings).

2.Strong culture of innovation: Exelon has developed a strong culture of innovation in order to stay relevant in the face of transformation that is taking place in the energy industry. Initiatives like the Exelon Innovation Expo provide a platform for all employees to come up with innovative ideas to address the challenges faced by the industry. The development of a Smart Reader App by two meter readers at Exelon to make the job of meter readers easier is a wonderful example of grassroots innovation that was made possible by the company’s encouragement of innovative ideas from employees. In 2018, a team of Exelon employees won ‘The Best of the Best Top Innovative Practice Award’, which is the nuclear energy industry’s highest honor for innovation. The team had developed a program for enhancing equipment reliability and supply chain quality in the industry. This initiative is called Parts Quality Initiative, through which spare parts of critical components are tested by Exelon Generation before being used and the test results are entered into a database named OneLab.

3.Strong performance of power generation division: The power generating division, which is an important component of the utility business, generates half of Exelon’s income. Because of a diverse portfolio of power generation sources like nuclear, solar, wind, gas and hydroelectric, there is reduced dependency on non-renewable sources. Exelon Generation has six regions of operation: Mid-Atlantic (New Jersey, Maryland, Virginia, West Virginia, Delaware, the District of Columbia and parts of Pennsylvania and North Carolina), Mid-west (portions of Illinois, Pennsylvania, Indiana, Ohio, Michigan, Kentucky and Tennessee), New England (Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont), New York (the state of New York), ERCOT (state of Texas) and Other Power Regions (Florida, Arkansas, Louisiana, Mississippi, Alabama, Georgia, Tennessee, North Carolina, South Carolina and parts of Missouri, Kentucky and Texas, California, Oregon, Washington, Arizona, Nevada, Utah, Idaho, Colorado, and parts of New Mexico, Wyoming and South Dakota, and also the whole country of Canada). The net revenue of purchased power and fuel expense of Mid-Atlantic has shown a 3.1% decline from $3317 million in 2016 to $3214 million in 2017. Midwest showed a decline of 5.1% from $2971 million in 2016 to $2820 in 2017. However, New England, New York and ERCOT showed strong increase in revenues during the same period. New England showed an increase of 17.4% from $438 million to $514 million. New York had the highest percentage increase among all the regions with 31.5% increase from $742 million to $976 million. ERCOT saw an increase of 18.1% from $281 million to $332 million. The Other Power Regions saw a decline of 9.2% from $336 million to $305 million.

Weakness

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Opportunity

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Threat

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Political

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Economic

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Social

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Technological

1.Rise of social media and data analytics: Data analytics platforms can help consumers in better consumption by providing them with real-time details of power usage. Data analytics can also be of help in the operations and maintenance of plant infrastructure. Sensors can collect data for getting insights on increasing reliability and availability. Sensor data can also be used to find out ways of reducing maintenance costs and downtime. Exelon has recently announced a multi-year agreement with GE to use the Predix software solution that acts on data generated from Exelon’s Smart Grid and Smart Meter in order to provide more reliable and affordable energy to customers. Social media can be used for customer support and alerts.

2.Popularity of blockchain technology: Blockchain technology is increasingly finding applications in the energy and utilities sector. One such application is balancing supply and demand for power, especially for solar and wind power. In many areas, variation in wind and sunshine affects the power supply. Using blockchain, power demand can be adjusted to match the supply or backup supply sources can be used that respond quickly in times of shortage. Exelon is one of the affiliates for Energy Web Foundation, which is a joint venture by Rocky Mountain Institute and Grid Singularity, an Austrian blockchain developer. This venture aims to explore the potential of blockchain on energy transactions.

3.Implementation of smart grid technology: Smart grid technology can be used to increase energy efficiency through two-way real time communication of energy consumption data between the homes and the utilities. The data can be obtained even at a particular appliance level that can help consumers act accordingly. Exelon is in the process of implementing smart grid across its whole network and has budgeted $25 billion to complete the work during 2016-2021. The merger with Pepco Holdings has ensured that Exelon now has the best practices and resources available for implementing smart grid technology.

Legal

1.Intellectual property rights: Utility companies, while increasingly adopting new technologies like smart grid, are at risk of being out of date with the legal issues involving the use of these technologies, so they are at risk of facing patent lawsuits. Companies must take advice of legal counsel to protect themselves from lawsuits. Also, when any company comes up with a new technology that can be implemented in the utilities sector, then it is advisable to apply for patents to avoid competing utility companies copying the technology. For instance, in solar power generation, the energy storage transactions involve being aware of IPR issues. The rapidly changing technology of the battery energy storage systems has made it important for manufacturers and vendors to be protective of the technology’s intellectual property. But utilities need access to such intellectual property for storage purposes. Vendors act as intermediaries between utilities and the manufacturers of batteries and other components of the storage systems. The utilities buy storage systems from vendors whereas the vendors buy the components of the storage system from the manufacturers. Due to the involvement of multiple parties, there should be careful analysis of IPR to ensure that the utility has uninterrupted access to the storage systems even if the vendor or manufacturer goes bankrupt.

2.Data protection laws: Utility companies have lot of customer data like energy consumption, personal details and payment information. As the utility companies move towards smart grid technology, there is a need for obtaining lot of consumption data from the customers, which further complicates the situation for the companies. The European Commission has set up the Smart Grids Task Force in 2009 to advise on smart grid deployment issues. Turkey has come up with a data protection law that requires energy providers to develop a framework to maintain personal data. The European Union’s new General Data Protection Regulation (GDPR) would require utility companies to make the necessary transformation of their systems for successful compliance.

Environmental

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