The inevitable increase in energy demand over the next several decades from the introduction of plug-in hybrid electric hybrids (PHEVs) makes some in utility sector shudder.
But absorbing the increase in demand from PHEVs is just one of a myriad of challenges facing the utility industry as it evolves in an increasingly carbon-constrained economy. It must also overcome a business model that often financially rewards utilities for the volume of energy delivered, while at the same time they face an aging electricity infrastructure.
"Last spring, there was a study by the Brattle Group that suggested that between 2010 and 2030, $1.5 trillion in new investments are needed in the utility space in that time frame just to simply maintain the level of service we enjoy today," said Mark Brownstein, managing director of business partnerships in
Environmental Defense Fund's climate and air program. "Two-thirds of that was in transmission and distribution."
Brownstein acted as moderator Wednesday during a Ceres conference panel discussion of the shift taking place in the power sector as it grapples with the deployment of renewables, SMART technologies and energy efficiency programs in the shadow of pending climate change regulations.
Climate change regulations will inevitably target utilities and transportation, but the power sector will end up shouldering a greater burden because of the introduction of PHEVs.
"Really, you're transferring the problem to the power sector," explained Swami Venkataraman, utilities director of
Standard and Poor's power and project finance division. "The power sector not only has to reduce its own emissions, it has to take on those of the auto sector and reduce those as well by 80 percent by the middle of the century."
One of the barriers facing utilities during the transition to a low-carbon sector is their business model: Utilities typically profit from selling more energy, not for helping their customers conserve it, which runs counter to their ability to reduce emissions. In order to help utilities in this transition, their finances must be insulated and decoupled from the amount of energy they sell.
"The bottom line is we're going to need to think about a 21st century utility that's more about service and less about throughput," said Rich Sedano, a principal with the
Regulatory Assistance Project.
Some utilities from around the country have already recognized it's cheaper to invest in demand-side efficiency programs than make the heavy capital investments to build more power plants.
Nstar, for example, is testing a pilot program called the
Marshfield Energy Challenge in Massachusetts that aims to freeze the town's energy load growth at zero using a combination of conservation, renewables and storage. Armed with a marketing program, the pilot has already seen dramatic adoption by Marshfield citizens: There were more photovoltaic sales in Marshfield last year than in Boston, while the 586 audits performed in the city were higher than in any other in the state.
Ultimately, the transition will produce an energy sector that will be quite different 100 years from now compared to the industry we know today.
"In the 21st century, it's going to be more than a bill and a toll-free number," said David Lodeman, vice president of environment at
National Grid. "We're going to have to be out there selling energy services, selling sustainability services to our communities. The way that we deliver our services will be completely different from what you see today."
"Steel tower" -- CC licensed by Flickr user OpenCage.
