The Impact of Energy Transition: Utility Perspectives Laney Brown Vice President Modern Grid Partners
Changing Energy Landscape • Disruptive • Regulatory (good & bad) uncertainty • Technology - • Impact on New foundational to Reliability Climate Technologies transition Change (Smart Grid, DG, Storage) Aging Changing • Retiring plants Infrastructure • Price + reliability Customer • Pent up (Generation, • More options Needs investment Grid) • Comparable to demand others • System inefficiencies
Energy Transition: Utility Perspectives 60% 66% No single view of utility execs expect their of utility execs say Continuum of utility positions: market to be ‘50% business model change Key drivers: Regulatory policy, cost transformed’ by 2030 is urgent of electricity, and customer expectations Changing Operations & Investment Focus Impact and speed 2016 to 2030 Shift from defensive to offensive Grid EVs Utility Customer 55% Utilities recognize the need to change DG 51% DG and are planning and implementing 48% Microgrid ‘utility of the future’ strategy: 41% 37% Customers Regulation Grid investments Workforce 11% 11% 8% 5% 3% Source: 2015 PwC Utility 14 th Annual Executive Survey
Utilities’ Challenges and Opportunities Challen enges ges Oppor ortu tunit itie ies Grid Investments • Reliability • Advanced technologies (Smart Grid, DG) • Cyber security Alternatives (NWAs) to • • Aging infrastructure traditional investments Costs • Regulation • Policy uncertainty • New business models and incentives • Risk of financial stability Customers Customer satisfaction New ways to serve and engage • • customers • Changing customer needs • New product & service offerings • Community engagement Workforce Aging workforce Opportunity for new skill sets • • • Agility and focus (Operations vs. innovation)
New York’s REV Policy & Utility Revenue: A Case Study Opportunities: Platform • Balances new regulatory incentives Revenue with traditional rate making Services (PRS) • Opportunity to test new business models Earning • Outcome-based approach Adjustment New Rate Mechanisms Design Challenges: (EAMs) • Meeting system and policy needs without increasing costs • Outcomes and values are unknown Traditional Rate Making • Simultaneous execution of traditional and new initiatives
Adapt and Evolve: Utility Action Plans Electric Utilities Electric Delivery (Vertically integrated) (T&D) • Invest in new technologies • Balance core capex + new Growth/ (grid/new generation) business opportunities Investments • Expand in gas sector • Growth through new • Coal to gas/renewables models/new services (EV) • Pursue balanced • Pursue re-regulation of Regulation regulatory approach non-competitive generation assets • Broader, customized • Broader service offering service offerings (EE+) Customers • Expand behind the meter • Increase customer engagement • Proactive succession planning (people/skills) Workforce • Balance operations/ innovation • Maintain focus on safety and reliability Source: ScottMadden Energy Industry Update
Summary Take a long term view but plan and execute today Identify opportunities within the transformation Maintain a balanced perspective: Safe, reliable and affordable are still the fundamental elements of service Focus on core business with increased (smart) grid investments, and expanding customer-centric offerings Execute on operational excellence and innovation in parallel
Modern Grid Partners is a consulting firm that provides business and technology expertise to our customer’s operations, projects, and future goals. We focus on increased operational performance and enhanced reliability by employing smart grid solutions. Our team members have supported customers around North America in bringing their visions to reality. Founded in 2015, Modern Grid Partners is headquartered in Portland, ME. info@moderngridpartners.com | 207.712.3577 | Moderngridpartners.com
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