Report from the field: DNV at EPRI’s Electrification Symposium, SECC’s Member Meeting, the Indiana Energy Conference, and APPA’s Customer Connections Conference.
The Big Picture on Clean Energy
Several organizations carry out research-intensive prognostications about the future energy resource mix that will likely be tapped to meet our future energy needs. At the recent EPRI Electrification Symposium in San Antonio, TX, former US Secretary of Energy and EPRI Board Member, Professor Ernest Moniz, was a keynote speaker. He offered the view of his think tank, the Energy Futures Initiative (EFI), whose mission is to help accelerate the clean energy transition with a balanced and science-based understanding of the options available for achieving at least an 80% reduction in carbon emissions, if not zero net energy, by 2050.
DNV’s own Energy Transition Outlook is an annual forecast of global and regional energy futures. Our predictions, based on extensive data analysis and scenario considerations, show that:
- Energy demand will peak by 2033 due to increasingly efficient use of energy globally
- We will experience rapid electrification driven by buildings, manufacturing, and transportation
- The share of electricity in final energy demand which doubled over the last 30 years, will double again from 19% today to over 40% by 2050.
Figure 1 illustrates the global Energy Transition Outlook according to DNV and Figure 2 shows the anticipated splits for the North America region.
Figure 1: DNV Energy Transition Outlook: Global Electricity Generation
Secretary Moniz echoed DNV’s conclusions, noting that “…electricity is the lead horse in the race to decarbonization” and electric utilities have a particular responsibility for managing the stable. “It is the role of the electric utility to help us achieve our collective societal, economic and environmental goals for addressing climate change.” At the same time, he pointed out that natural gas will continue to be “the stabilizer” that enables more and more renewables to take hold.
DNV’s analysis agrees, noting that the rapid increase in clean energy technology will require that the “…flexibility provided by the conventional generation technologies will continue to be significant.” That may seem counterintuitive, but Dr. Moniz’s position is based on an extensive review of the data.
According to EFI’s investigations, the following can be said about the main clean energy contenders:
- Wind: The performance of utility scale wind in California over the past few years showed there were instances of up to 10 days of consecutive windless days. Recent outages due to wildfire concerns exacerbate that region’s reliance on wind energy in a very real way.
- Solar: Similar investigations of actual solar system performance data in Texas indicated an eerily similar pattern of up to ten days of cloud cover that prevented solar production from taking place. Such long-term outages will require back-up systems to carry the load.
- Storage: Storage technology today can only deliver about 2 hours of back-up power; the gap that remains during such events is considerable, and would scarcely be tolerated by either consumers, businesses, or the increasingly sensitive types of equipment we all rely upon in our daily lives.
How Much and How Fast?
Back to the original question posted in the title: How much clean energy is appropriate in the utility’s mix of energy resources for meeting demand, and how fast should it be deployed? The answer is, it depends. Here are some examples of prudent yet progressive plans of five very different utilities that provide a range of answers to an appropriate clean energy transition strategy.
CPS Energy: Slow and Steady in Line with Customer Needs
San Antonio’s local public power utility, CPS Energy, and its CEO Paula Gold-Williams provided important balance to the national projections with a local utility’s perspective for considering how best to affect a transition away from fossil fuels – in both utility generation and customer uses – toward the trifecta of clean energy options: renewables, storage, and efficiency. “The path we have laid out must above all be practical,” she noted. While some environmental groups push for extreme actions and a faster pace of change, the utility must continually balance progress toward decarbonization with reliability and a commitment to keeping customer bills affordable. At the same time, she noted, technology developments must be embraced. As an example, Ms. Gold offered the cautionary tale of Kodak’s misstep where they buried the solution to digital photo technology for years as too much of a threat to their core product. Fast forward to our cell phones offering exceptional digital photo quality today, while Kodak was left in the dust. So, while the shift to a clean energy future is already well underway, CPS Energy is committed to harnessing new technology while still putting customers first to ensure that energy reliability, choice, and equity remain front and center during this transition. CPS Energy’s pace and scale of transition is consistent with the needs of its customers.
TVA: A Conservative Yet Concerted Transition to Clean Energy
As a major generation and transmission entity, governed by a U.S. Senate- appointed Board of Directors with regulatory oversight of leadership and operations, TVA takes national the national sentiments towards carbon reduction seriously, as reflected in its recent Integrated Resource Plan. Along with reliable and low-cost power generation responsibilities, TVA is equally committed to environmental and economic development responsibilities across the seven-state region it serves. Long active in energy efficiency, the realities of its member local power companies and their customers is that per capita energy consumption has been decreasing over time, despite the rapid growth recently experienced by some of its cities. The revenue impact on the local power companies means that TVA must continue to emphasize low cost options, while slowly but surely reducing the proportion of power generated from coal. The 2019 IRP features the following clean energy features over the previous 2015 plan:
- Retires more coal generating units more rapidly
- Maintains energy efficiency at the same levels as 2015
- Incorporates more demand response
- Adds more solar resources, both customer-driven and utility-developed.
TVA acknowledges the opportunity for both utility-scale and customer-owned clean energy resources in its plans, noting that it is committed to working business, like Amazon, that are locating in the Valley as well as the local power companies to integrate these clean energy options into the system.
NIPSCO: Accelerating the Pace with an Ongoing Commitment to Efficiency
As with all good engineers, utility planners like to base their analyses on actual data. Data that goes into integrated resource planning includes the related to technology performance and costs. Quoted recently in the New York Times, NIPSCO’s CEO noted: “The surprise was how dramatically the renewables and storage proposals beat natural gas… I couldn’t have predicted this five years ago.”[1] As with the global forecasts from DNV and EFI, solar will play an increasing role in NIPSCO plans for the next 20 years. Note the ongoing contribution of demand side management in the utility’s plan, a resource that grows and stays fairly significant over the last decade of the planning cycle. That component is consistent with Michigan’s state regulatory objectives that continue to focus heavily on consumer and business energy efficiency opportunities.
Xcel Energy: Accelerating the Pace of Transformation
Brett Carter, Executive Vice President and Chief Customer and Innovation Officer of Xcel Energy, spoke at the Smart Energy Consumer Collaborative’s member meeting in October. Xcel Energy is the first utility to announce that they will be carbon free by 2050, 80% carbon-free by 2030. They are thinking about innovation on a large scale and engaging with groups outside of the energy industry to make it happen. For example, Xcel is part of an Innovation and Transformation group in Minneapolis-St. Paul where 18 Fortune 500 and 33 Fortune 1000 companies are located or headquartered.
Xcel is “building their future around the customer” in recognition that utility has not traditionally had a culture of transformation and innovation but sees this as an imperative when having to think about the customer first. “We’re not treating you like a premise. We’re treating you like a person”. To Xcel, their commitment to a scale and pace of transformation is customer-driven.
Importantly, they are looking to set up an architecture that will be flexible and scalable to accommodate partners. They are getting there by using tools like Agile and setting up cross-functional teams to enable this transformation. Xcel is also investing in the technology and data infrastructure to support the transformation. An example of how innovative this utility is can be seen in the fact that Xcel was the first utility in the country to receive Federal Aviation Administration approval to fly drones beyond line of sight of the pilot for conducting inspections. They are innovating with offers for the customer like an all-you-can-eat $35/month Nights and Weekends plan, special EV rates and customer choice for renewables.
Fast or Slow, Transformation is Happening!
Whatever clean energy transformation scope and pace you are moving at, there is no question that the electric utility industry is transforming toward a lower carbon future. Keeping the lights on remains job #1 for all utilities, while constantly thinking of creative and innovative ways to do so.
Both the EFI and DNV frameworks keep all technologies on the table and recognize that there is not a one-size-fits-all national solution to carbon reduction. Rather, the solutions must be regional in nature and take into consideration – like Gold of CPS and Carter of Xcel Energy remind us – the people and communities in each region. Solutions must be based on actual data combined with what is practical. Only with the proper balance of perspectives, scale and pace can we achieve the clean energy transition.
DNV is committed to the digital transformation, energy innovation and practical solutions. We are technology neutral and spend 5% of our revenues on researching, piloting and testing new technologies and solutions for our energy clients. Download the 2019 Energy Transition Outlook to learn more about how the energy landscape is evolving and how it will affect your business.
[1] New York Times, “It’s not too late for the climate” Sept 22, 2019