Innovative Leadership: A Must for Electric Utilities Today
For more than 100 years, electric utilities have been building and operating the same facilities: substations, overhead and underground power lines, and overhead and underground connections to homes and businesses. Although these legacy facilities are cost efficient, they fail during winter storms, lightning storms, tornados, and hurricanes, all of which are already increasing in intensity due to climate change. Plus, legacy components are known to ignite wildfires and electrocute workers or the public who accidentally contact downed lines.
These legacy electrical systems are based on sound engineering principles that were developed before the introduction of modern technology and materials. Electric utilities remain the only industry mired in the past. Other vital industries, including communications, aircraft manufacturers, and automobile manufacturers have implemented innovations that improve efficiency, safety, and environmental impacts.
Now is the time for electric utilities to do the same, especially in the face of a changing climate. Read on to learn more about how electric utilities can encourage innovation within their companies. You can also contact us for specific innovations that we at Prescient are happy to share.
Tradition Holds Electric Utilities Back
What is preventing electric utilities from updating their systems? The answer lies in the Key Performance Indicators (KPIs) that electric utilities use to judge their performance. Typically, electric utilities embrace four KPIs:
Customer and Stakeholder Satisfaction
It is time to add innovation as a KPI, in addition to those listed here.
Our world is evolving at breakneck speed. Large, remote coal-fired generating facilities are being replaced by offshore and land-based windfarms. Rooftop solar panels are being installed in remote rural areas and in densely populated urban areas. Battery storage technology has increased exponentially and continues to be researched. These technologies will be necessary to mitigate the worst impacts of climate change.
Some innovations that Prescient recommends for electric utilities, such as electric energy warehouses that replace substations, electric powerways that update transmission lines, and electric serviceways that update distribution lines, require electric utilities rethink their business models.
Other recommended innovations, including armless transmission and distribution line construction, coated overhead line conductors, and transmission and distribution pole footers, can improve operational excellence, safety, and customer satisfaction with minimal impact to an electric utility’s business model.
Encourage Innovation from Within
Electric utilities need to embrace the legacy of Thomas Edison and Nikola Tesla. It took Edison more than 2,000 attempts to arrive at the filament that made light bulbs a commercial success. Tesla spent years developing the concepts of AC power systems. The pathway to innovation is a multistep process.
To implement new innovations, electric utilities must first recruit innovative leaders: individuals who understand modern materials, technologies, and fabrication techniques. An understanding of electricity is a bonus for innovation leaders. However, it should be concerning if people hired for these roles have only worked for electric utilities.
Next, utilities should encourage innovation by rewarding current employees who introduce new ideas. Some of the best ideas are introduced by workers with boots on the ground and hands on the wires. Workers with creative ideas should be encouraged, rather than stifled.
Finally, once an individual’s ideas have been effectively implemented, that individual should be celebrated within the company. When I moved to Oregon, one of the first engineers I met was an innovator named Leo. His work was honored with a plaque displayed in the lobby of the building where he worked. Leo remains an inspiration to every young engineer who works at his company, and many of us who pass through its doors.
Kick Start Innovation in Electric Utilities
To create real change within electric utilities, each company should hire a Director of Innovative Technology. The person in this role will be expected to constantly elevate, evolve, and pioneer the future of electric utilities in ways that have never been done before.
This individual should be comfortable discussing energy transfer, material properties, thermodynamics, and cutting edge concepts. They should be comfortable with both the virtual and physical world. They should be an inspiration to everyone and a nemesis to no one, recognized as an extraordinary leader by everyone - linemen, technicians, engineers, and managers.
Update KPIs to Better Judge Success
Electric utilities need to recognize that innovation is essential, including updates to their KPIs. The following metrics can be used as indicators of operational excellence and customer/stakeholder satisfaction:
Individual customer power quality
Individual customer outages
Greenhouse gas emissions
Cost of energy for each customer
These updated metrics will ensure that the grid continues to be reliable in the face of many changes, including new energy production technologies, increased demand for electric energy, and a changing climate. By having a contextually appropriate score in each category, electric utilities demonstrate that they have a record of industry leading performance.
The Bottom Line
Like most businesses, electric utilities are concerned about the bottom line. Will investing in innovation mean less profit? Rather than asking “What will this cost?” utilities should wonder “What opportunities am I missing?” Not investing in innovation will lead to missed opportunities and lack of advancement. Industry leaders do not become said leaders by minimizing research and development funding.
A typical mid-sized electric utility has an income stream of $2 billion per year. The minimum yearly investment in innovation should be 0.1% of the yearly income. This amount will have little impact on the bottom line. The hope is that 5% of R&D funding will lead to decreased expenditures and increased savings that justify the total R&D budget.
Reach Out to Learn More
Prescient has a shopping list of innovative ideas that can be implemented by the electric utility industry. Reach out and we’ll send you a copy that includes short descriptions and advantages.
You can also check out our next generation blog collection, which includes detailed descriptions for many of Prescient’s recommended innovations, including: