Utilities are the new cool
Thriving in the age of climate change pivots around electricity, and that means electric utilities are at the center.
"Hold on, Boomer. Electric utilities? How much stale control room coffee have you had?"
Hear me out. Mitigating global climate change? Electric utilities are the pivot. Adapting to a changing climate? Again, the pivot. Cleaning the air? Ditto. Electric cars, trucks, everything? Unlocking the economic, societal and environmental opportunities in that transition? Bingo: electric utilities. Maintaining resilience in the face of COVID-19? Yup. Sustainability, resilience, you name it: Thriving in the age of climate change pivots around electricity, and that means electric utilities are at the center.
The next decade is crucial in setting the climate change trajectory for our planet. At the same time, the consequences are already here: drought and apocalyptic wildfires; rising seas and flooded cities; and unprecedented storm intensity and frequency.
As a result, the electric utility will change more in the next decade than it has in the last century. On the supply side, wind and solar power are reaching immense scale, and new technologies such as green hydrogen are coming into view as coal wanes. Energy storage is just getting started. Legacy resources are finding new roles as renewable integration machines. On the demand side, building and transportation electrification are going mainstream. Behind the scenes, the internet of things and data science and privacy, cybersecurity and customer choices around the reliability, affordability and sustainability of electricity are creating opportunities and challenges that we can only begin to imagine, from the granular to the global and everywhere in between.
Maybe you missed the technology revolution of the 1990s or (like me) were just a spectator. Here’s your chance. None of us were alive when Thomas Edison and Nikola Tesla created the fundamental assumptions we live with today. Ready to create the future? Here we go.
To begin, a reality check. The challenges are enormous. Electricity is unique and strange. You can’t see it, taste it or smell it. It moves at the speed of light and must be consumed the instant it is produced (ponder that for a second). There are no standardized, economical ways to store large amounts of it easily and effectively. And it can kill you. It is the worst form of energy, except for all the others. Trillions of dollars have been invested over the last century to electrify the world (and we’re not nearly done yet). Many have called the power system "The World’s Greatest Machine."
Electric utilities have planned, engineered, financed and operated that machine — and dealt with electric consumers — in much the same way for those hundred years.
Mostly, the planners planned, the engineers engineered, and so on, each in their own silo. No more: "Post-silo" opportunities and challenges dominate the business. As a result, success demands a multi-disciplinary approach that works across the value chain as an interdependent whole: customer energy efficiency programs, electric vehicle charging, rooftop solar, risk management decisions, renewable energy integration — the list goes on. This doesn’t come easily in traditional, siloed utility cultures and organizational structures. Instead, managers must lead multi-disciplinary teams to achieve those complex objectives.
The stakes are eye-wateringly high
Electricity is, as the U.S. Department of Homeland Security put it, an "enabling function" upon which our personal, societal and economic lives depend. A century ago, reliable electric service quickly went from luxury to essential and our reliance upon it grew: it had to be there, (almost) no matter what, and as inexpensively as possible.
Severe weather? Natural disasters? Get the power back on so we can fix everything else! For more than a century, electric utilities built their infrastructure, process and culture around these expectations. Dependable, predictable? Yes, by design. Dynamic, innovative? No, also by design. As a result, electric utility jobs were steady and secure. Change was slow and innovation met skepticism. Electric utilities did their best to stay out of the spotlight. All by design.
Fast forward to 2020, and we are redesigning and rebuilding that power system even as its "enabling function" grows more pervasive, more fundamental.
Imagine driving fast on an unfamiliar mountain road while simultaneously reengineering and rebuilding your car from a 1974 Oldsmobile to a 2020 Tesla. With the entire world — our societies, economies and our environment — bickering in the backseat.
The public eye is upon us as never before. Climate change has brought intense focus to electric utilities, from the "greening" of power supplies to the proliferation of electric vehicle charging infrastructure to the resilience of the electric system as wildfires and floods make headlines around the world. COVID-19 reminds us that, even in quarantine, we need reliable electricity to power everything from productivity to creature comforts.
It’s an enabler because electricity is the default replacement for fossil fuels such as oil, gasoline and natural gas across our economies.
For example, transportation and electricity, which barely have interacted up to now, increasingly will define each other’s businesses. It’s the same for water heating and space heating. But electrification won’t happen at scale unless electricity is reliable and affordable today, tomorrow and over the long term — especially for those 1-in-5 Americans who already struggle to pay their energy bills. Subsidies can kick-start the change, but economic motivations give that change wings. Reliable and affordable electricity is a precondition to climate change mitigation and adaptation.
At the same time, electricity is an enablee because we must ensure that the process of generating electricity produces as little greenhouse gas (GHG) emissions and pollution as possible while maintaining reliability and affordability.
Renewable energy — solar, wind, geothermal, for example — has become much less expensive (and thus ubiquitous) at a rate that few could have imagined, especially in decentralized applications such as rooftop solar. Cost-effectively integrating those renewables — turning intermittent supply into reliable service — is the machine’s new challenge and one that we’ve only begun to grapple with.
So far, the job of integration has fallen to legacy fossil-fueled and hydroelectric power plants. At Burbank Water and Power (BWP), we are repurposing both the octogenarian Hoover Dam hydroelectric plant and the modern natural gas-fired Magnolia Power Project to integrate renewables.
Looking forward, we are working on everything from synergies among renewables (such as evening-blowing wind that complements the sun’s daily cycle) to "green" hydrogen production and advanced power generation to energy storage technologies from batteries to compressed air energy storage.
This is critically important: BWP is on track to double its renewable supplies in the next five years (from 33 percent renewables to 66 percent or more) and then to 100 percent zero-GHG supply by 2040, all without sacrificing reliability and affordability. Ultimately, these efforts will determine whether electricity can be both an enabler and enablee of climate change mitigation and adaptation.
More broadly, achieving the low or zero net-GHG power system will require asking difficult questions. For instance: What is the optimum intermittency in the power system, where the costs of managing intermittency outweigh the benefits? I mentioned the Hoover Dam: Do the zero-GHG and renewable integration benefits of large hydro adequately offset the environmental impacts?
Nuclear power, also inherently zero-GHG, raises similar questions. And so do solar panels, wind turbines and batteries — to many people’s surprise.
That’s just the supply side of the equation. Utility customers — residential, commercial and industrial — are just beginning to realize the possibilities, opportunities and challenges associated with understanding and managing their energy needs. (Engaged, proactive customers — like you, I hope — are positioned to thrive in this new reality.)
That raises another series of questions. How do we optimize across the utility value chain, from power generation to the customer’s end-use, when power generation (such as rooftop solar) and storage (such as Tesla Powerwalls) is increasingly on the customer end of the chain? What is the best mix of reliability, affordability and sustainability to each customer? How does each building, vehicle and device best interact with the utility to best meet the customer’s needs? Who pays for each element and how? And how do we stay abreast of technology, educate each customer on their (ever-evolving) choices and desires, maintain cybersecurity and customer privacy, avoid subsidization — the list goes on.
Transformation is rarely straightforward and never easy. But transform we must, even as we provide reliable, affordable and increasingly sustainable electric service through and beyond that transformation. Like Edison and Tesla before us, decisions today will affect generations to come. It’s all-hands-on-deck to create the future for ourselves, our families and our world.
The views, thoughts and opinions expressed in this essay belong solely to the author and not necessarily to the author’s employer, organization or other group or individual.