The Encouraging State of the Electric Utility 2020
The results of the Utility Dive’s Seventh Annual State of the Electric Utility Survey are encouraging for renewables, sustainability and the environment – 46% of the respondents recognize that they pose the top challenge facing utilities. The survey shows that the majority of utilities are taking action to achieve climate resilience, on the one hand by setting carbon reduction targets and adding renewables to the energy mix, and on the other hand by taking action to improve public safety and harden the grid. In a webinar discussing the topic and the survey, leading energy professionals shared their insights on the future of the U.S. power sector.
Utilities Need New Storage Technologies to Complement Intermittent Renewables
The main takeaway – the face of utilities is changing at an accelerated pace. To enable the broad influx of renewable generation resources, new business models and grid modernization, new technology solutions are in high demand. As more intermittent renewables enter the mix, there is greater need for complementary energy storage, and the search for solutions is widening. The survey shows utilities’ expectation to invest in grid-scale battery storage has in fact fallen somewhat; in addition to growing uptake of lithium-ion battery technology and applications, utilities are looking at innovations in pumped hydro, thermal storage, compressed air, and hydrogen energy storage via fuel cells and other applications.
From Monopolies to Distributed Energy Resources
In terms of power generation, the survey doesn’t bring surprises – utilities expect significant growth of grid-scale solar, moderate increase of wind, distributed energy resources (DERs) and storage alongside efforts to leverage hydrogen to reduce carbon emissions from gas and in parallel decreases in coal, oil and nuclear power. Already in California the “duck curve” shows surplus solar energy at midday is in curtailment; this invites demand for more storage, while limited transmission capacity for grid-scale solar could make distributed solar and other DERs more economical. As commercial and industrial companies have already purchased over 9 GW of renewables and are demanding more control and flexibility vis-à-vis power resources, increasing distributed resources in the energy market are pushing utilities to adapt their business models and regulators to modify policies accordingly. The historical view of the utility as a monopoly is giving way to more flexible and accountable organizations that are dedicated to satisfying customers and to partnering with public regulators and with commercial companies that together shoulder the responsibility for effecting change.
Uitilities Gear Up for Electrification
Utilities are also well-aware of the need to gear up to manage the upcoming challenges of electrification. The grid faces the huge challenge of EV charging, starting with the fleets typical of commercial and public transportation and later of private vehicles. Decarbonization goals are also advancing electrification in other industries, such as building and water heating and cooling, and making headways in traditional heavy industries as well. When the goal is decarbonization to achieve sustainability without losing power, electrification is the default solution and although DERs are assuming some of the load, utilities will continue to be the primary source of electricity.
Meeting Parallel Challenges is a Tough Balancing Act
This increased demand for carbon-free electricity must be balanced alongside the utilities’ continued challenge to provide affordable service to consumers, reliable primary and backup power and climate resilience in face of increasingly severe weather, security against expanding cyberthreats and grid modernization in the face of aging infrastructure. To meet these many challenges at once while retiring carbon-intensive resources is a very tall order, as well as a costly one. Utility rate changes to fund new initiatives involve public policy-makers and regulators, which is complicated by the lack of alignment between federal and state policy makers. But while there has been little movement on federal clean energy policy, many states have introduced or strengthened policies to promote clean energy, such as renewable portfolio standards. As more states increase their level of performance-based regulations, policy-makers seem to be more flexible regarding creative ways for utilities to leverage and pay for innovative technologies for renewables and storage, distributed resource management, smart grids and operational intelligence, energy efficiency, electrification of transportation and improved resilience in face of climate change.
So where are we with all this? Utilities don’t have all the answers, and many of the technologies needed to meet many of these tough challenges are probably not yet available. But we do see that utilities are facing the challenges head on and embracing change at a rapid pace. During the webinar, Lincoln Bleavans, Assistant General Manager for Power Supply at Burbank Water & Power, forecast that utilities will change more this decade than they have changed in the last hundred years. Leaving behind the silos of the past, utilities will need to integrate cross-organizational knowledge to better define the problems they face, and this will let them better solve them.
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