Electric utilities need to prepare for the next generation (4Ge) electric energy grid in the face of climate change. Soon, major changes will occur within the electric utility industry, prompted by new regulations and consumer expectations. Electric utilities that embrace change, meet customer expectations, and surpass the expectations of government mandates will swallow electric utilities that fail to innovate.
Prescient predicts that in the future there will be fewer than ten electric utility holding companies in the continental U.S., a stark contrast to the several hundred independent electric utilities in the U.S. today. Each holding company will be the parent of operating companies that maintain established relationships with regulators and consumers. Holding companies will create new relationships with suppliers, manufacturers and contractors that increase grid standardization, reduce delivery time for components, and facilitate rapid recovery when storms occur.
In this post, we introduce you to the many factors that electric utilities will need to keep in mind as they upgrade to the 4Ge electric energy grid. If electric utilities are to rise to the challenge and remain independent, they must understand consumer expectations, anticipate the perspective of those who would thwart innovation, and embrace the objectives and components that will be needed to upgrade to the 4Ge grid.
Over the next several weeks, we will take a deep dive into each of the topical areas outlined below.
Understand Consumer Expectations
Innovative electric utilities will accommodate consumer and regulator demands in the 4Ge electric energy grid. They will start with the end in mind, implementing new strategies and technologies that will meet objectives of consumer expectations related to climate change.
In the future, electric utilities will need to focus on innovations in several areas, including:
Distributed Energy Generation
Distributed Energy Storage
Cogeneration (Combined Heat and Power - CHP)
Customer Reliability Metrics
This focus list was culled from more than 50 topics introduced at meetings with consumers, electric utility staff, and regulators. We also referred to the New York Times bestseller Drawdown – The Most Comprehensive Plan Ever Proposed to Reverse Global Warming to better understand consumer perspectives.
Anticipate Innovation Assassins' Perspectives
When change occurs in any industry, it is met with supporters and naysayers. At Prescient, we have created an Energy – Attitude Assessment Matrix, shown in Figure 1, to outline the four main attitudes often found within a company that is approaching change: innovation leaders, innovation supporters, innovation resters, and innovation assassins.
Figure 1 shows the four main attitudes often found within a company as it approaches major changes.
During the transition to the 4Ge electric energy system, innovators will deal with assassins who use their knowledge of electrical system design to thwart the implementation of the next generation grid. Assassins will focus on:
Energy Demand Response
Near Perfect Islanding
When developing the 4Ge electric energy system, innovators need to understand concerns that will be raised by assassins in their workplace. By anticipating assassin’s perspectives, innovators will have the tools necessary to proactively address concerns before assassins can stifle change.
Embrace 4Ge Electric Energy Systems
Within the next 5 years, the electric grid must be updated to accommodate the many changes expected by consumers, demanded by regulators, and necessitated by climate change. For example, distributed renewable energy sources must be implemented across the U.S. at a faster pace than ever before. Energy storage technology must be widely incorporated into the electric energy grid.
Embracing new objectives and components will be necessary to hasten this transition. Innovative decision makers should consider Prescient’s recommended technical upgrades, outlined below, that will lead to systemic improvements to the 4Ge electric energy system.
Electric utilities that continue to thrive will:
Convert substations to electric energy warehouses.
Convert transmission lines to electric powerways.
Convert distribution lines to electric serviceways.
Update customer reliability metrics from SAIDI and CAIDI to, for example:
CELID (Customers Experiencing Long Interruption Durations)
CEMI (Customers Experiencing Multiple Interruptions)
CEMM (Customers Experiencing Multiple Momentary Interruptions), and others.
In some cases, electric utilities will be returning to their roots with these updates. Before World War II, many towns received electric energy produced in a small, nearby power plant, similar to a microgrid. Jim Stone, a Prescient staff member, authored a paper that outlines this historic energy production and transfer system: Lehigh Navigation Coal Company, Electrical System, A turn of the Twentieth Century Mini-Grid. Small scale power production, transmission, and distribution like this will also be key to the 4Ge electric energy grid.
Innovation Defines Industry Leaders
Industry-leading electric utilities will innovate to create the grid of tomorrow, and will acquire electric utilities that are resters. Follow along on our multi-week journey to discuss the changes required for the 4Ge electric energy grid, and recommended techniques to stop innovation assassins from thwarting change. Follow us on LinkedIn or subscribe to our blog and never miss a post.
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