The regulating bodies of those utilities work hard to create incentives for them to innovate. I spent four years of my career working on energy programs with major utilities around the country in which they tried to incentive reductions in energy usage.

Which is a curious statement: why would a electrical utility want people to use less electricity?

The reason is because the regulatory agencies created incentives within the regulatory framework to encourage them to do it. Basically the regulators start with an outcome, bake that outcome into how utilities get paid, and then let the utility innovate to figure out how to do it. This led to meaningful reduction in energy usage across many markets.

I'd love to hear more, what kinds of incentives? Is it something like, "if you get X efficiency, you get N more dollars"?

There are a bunch of different models but they mostly come down to the regulatory agency (IE: the PUC) creating a pot of money for utilities that is paid out when they reach energy reduction goals.

You can learn more by looking into Demand Response programs and Demand Management programs around the country.

There's no such thing as choosing renewable energy on a grid. Energy is fungible. If you get on one of those "choose green" schemes, you're just getting the same energy but also buying some credits from somewhere else.

What incentive does the app store have to innovate now?

It's not something that should be a choice. The government should move as much power to renewable as fast as possible and you should just keep getting power. This idea of "choice" for a commodity based on how it was produced not based on any features is crazy and will never work.

What's wrong with your local power provider not incorporating renewables? There are still solar installers, and it probably a better deal overall to own your own plant, as it were.