First of two stories.
Across North America, utility executives know they're running out of time to plan for an elusive future, yet many are still waiting for that future to tell them what to do.
Utilities seem frozen in the headlights of an onslaught of sudden challenges—the advent of renewables, distributed generation, cheap battery storage, new competitors, new customer expectations, new startups looking to capitalize on change, a massive influx of raw data from smart meters. How will they respond to it all?
However they respond, say industry experts, they must do it now.
“Basically, it’s time," said Michel Gévry, president at the Quebec consulting firm Capgemini Québec, during an appearance at Itron Utility Week in Los Angeles. "Short term in the utility business usually is ten years. A strategic plan is 20 years. These things are happening right now. How fast can you change within your own organization?
"The real thing is fast— how can you do it fast? You need to do it now."
A day after Gévry addressed utility executives in Los Angeles, a ComEd executive took to the stage at Chicago Ideas Week and described "a profound change in how we think about how we do business."
"For us, we’re quite used to 100 years of building these structures on the ground, whether they’re the poles, the wires, the substations, or the grid, and people will come and use that," said Jane Park, director of business strategy and technology for ComEd, an Exelon-owned energy delivery company.
"So imagine how hard it is for our culture to pivot, where that’s no longer the case. We see increasing distributed energy resources, wind, solar, we’ve just spent an hour hearing about all kinds of the things people want to hook up to the system. So if we’re in that environment, what do we do? Fifty years ago we probably would have gone back and built it ourselves; today through collaborative disruption, we’re reaching outward in a number of ways."
Park described outreach as a "foundational pivot" for ComEd, but what that pivot means in practice still emerged as a series of questions, with few answers. In Park’s words:
• Part of what the future will depend on—with opening ourselves up to other entrepreneurs and startups—is how do we help our customers by being as interoperable as we can?
• What does that mean in terms of our internal data structures?
• Do we build external data exchanges?
• How do we participate in "Green Button Connect My Data" so that your data will automatically go to your authorized third party developer or provider?
“These are the types of things that will accelerate change for the customer, but they are really part of our foundational pivot: don’t retract, just keep reaching outward.”
Asked to name examples of projects ComEd is already pursuing, Park offered two: a collaboration with Chicago and other municipalities on developing smart cities, and a collaboration with the startup Bidgely to help customers determine which appliance is causing a bill to spike.
Seven years into the energy revolution, the questions for utilities may still outnumber the answers because of the industry's cultivated inertia.
Risk vs. Resistance
Back in Los Angeles, the chief strategy officer for Spokane-based Avista Utilities, Roger Woodworth, urged industry leaders to be more aware of their innate response to risk, and to beware of resistance.
"Resistance is the Achilles heel of our industry," Woodworth said. "It’s this idea that somehow the world can change around us but we don’t have to. And if you or your leadership is of that mindset, then I think you’re at higher risk than those of use who are more apt to embrace change."
But letting go of resistance does not necessarily mean embracing risk, he added, tracing a course for utilities between the Scylla of resistance and the Charybdis of risk.
"Your utility by design is not supposed to take more risks. The services we render are part of the very fabric and the economy of the communities we serve. We’re paid to make sure that stays on all the time. So new risk is not the right idea.
"That doesn’t mean there can’t be room for innovation, and on this topic in particular I think it’s absolutely critical we find a way."
A number of new opportunities may ease the way… after the jump…
Batteries To The Rescue?
Some of the solutions also look like problems. Some challenges utilities face—such as managing variable solar and wind power—may be met by other changes on the horizon—such as affordable battery storage.
"We definitely believe that the combination of PV and storage will definitely change the grid. Microgrids will take care of some of the issues that we have right now. We’re seeing already utilities buying megawatts of batteries in order for them to maintain their existing grid," Gévry said.
But batteries are also conspiring with solar and wind to drive the cost of electricity so low that utilities aren't sure they'll be able to pay for all they must do.
"The cost of producing and transporting and distributing electricity will be so low when it’s done local—the highest price you pay for electricity in 10 years will be so cheap —but we’ll still have to manage customer experience, how to get all of that integrated."
Data To The Rescue?
Data also brings utilities a befuddling mix of challenges and opportunities.
The first challenge is what to do with all the data now pouring into utilities from smart meters. At a Smart Grid Sympoisum two years ago in Chicago, industry experts puzzled over all the data they were receiving, and little has change since then:
“The amount of data this is generating is phenomenal. It’s generating terabytes of data,” said Paul Myrda of the industry-sponsored Electric Power Research Institute, during a panel at the 2013 Great Lakes Symposium on Smart Grid and the New Energy Economy. “There’s a lot of data there; what do you do with it? How do you take advantage of it? How do you manage it? At what point does it become not useful?”
Last week, Park said that ComEd, which once concerned itself only with a physical network of power plants, substations and wires, now also has a digital network of sensors and smart meters, and a social network of customers who want to trade energy or barter and collaborate on initiatives like community solar.
"We now realize we can’t survive in a one-network model, such as the grid. We live in a mesh network. We have to figure out how to create a value chain between the three networks," she said.
During another Chicago Ideas Week panel, University of Chicago theoretical physicist Robert Rosner said that he and thousands of other Chicagoans now have smart meters, but no way to benefit from the data they collect.
"We all have smart meters, but what do you do with them? I totally agree that there’s a huge market for folks like me to actually take advantage of the smart meter I have. Right now it’s useless to me."
In the chaos of data, Woodworth sees the industry's greatest opportunity:
"In my opinion the single most important technology in our future is what we do with data," he said, because of its value potential.
He offered this example: If utilities were to compare their data with water usage data, they might notice a relationship immediately with pumping loads. But what if they they then compared those two data streams to other variables, such as building occupancy, weather patterns, traffic—and how do those things relate to human health or any other number of vectors that might be assessed?
“It can change the world, starting one city, one community, one district at a time. But not if we’re not doing something with it.”
To see what they might do with it, read part two of this series: Utilities Should Become Energy Services Providers
Utilities Running Out Of Time To Adapt To Energy Revolution
First of two stories.