Working as a recruiter in the utility space, and as a former utility employee, I’ve noticed a lot of changes in the industry over 30 years. It seems the utility industry is changing more rapidly than ever before. I wanted to write down some of the key trends I am seeing in the hope that it helps you stay ahead of your customers, regulatory bodies, and competitors. Some of these trends may seem rather obvious, while hopefully others will be intriguing or thought-provoking. My main reason for writing this article is to spur conversation – I’d love your input on these and other trends if you work in the utility industry.
New Transmission Investments
New transmission lines are a challenge to build due to public opposition, regulatory approvals, and extreme cost outlays, but there is a growing interest in these type of multi-state projects to bring renewable power from where it’s generated to where it’s needed. This is a trend we will likely see into the future as most of the existing coal-fired power plants are slated for retirement and as states continue to announce clean energy goals and targets. Utilities may not be able to get access to all of the renewable power within their own service territory and may need to link up to solar farms in the Southwest, wind farms in the Midwest or hydropower in Canada. Utilities will have to include renewables in their integrated resource planning and many already are doing so.
A prime example of a new transmission project is called Gateway West, a 1000-mile transmission line which was proposed to connect with wind power in Wyoming to serve the West Coast. One of the hurdles, besides seeking permitting and public approvals, is securing the funding necessary for these billion-dollar capital investments. Utilities should seek partnerships with other utilities or private entities, as well as to seek pre-approval from regulatory agencies, to make the investment more appealing.
Broadband Services
Several utilities, especially cooperatives and municipalities, are offering broadband services (or related services) to their customers and members. Many see this as an extension of their commitment to serving their constituents, and it can leverage much of their existing infrastructure (although new investments and systems will also be required).
Invenergy, a private company based in Chicago, announced plans to include broadband capability on an 800-mile transmission project that would incur no additional cost to Missouri communities. They plan to solicit internet providers to use the infrastructure to provide broadband for underserved residents and stated that more than 250,000 rural Missouri households and businesses located within 50 miles of the transmission corridor currently do not have broadband access.
Electric Vehicle Infrastructure
Several upcoming electric vehicle models, along with falling battery prices, should allow electric vehicles to reach cost parity with traditional gasoline-powered automobiles by 2025. Along with public and political pressure because of climate change, utilities may need to invest heavily in EV infrastructure, such as charging stations. Southern California Edison has broken ground on a program that will include nearly 900 commercial charging stations over the next five years.
Depending on how things play out this November, EV proliferation could flourish under a Biden administration. A Biden-Sanders task force recently released its climate and energy proposals, and one of the key items was to convert the national school bus fleet (500,000 buses) to zero-emission vehicles in the next five years. School buses are ideal for electrification since they generally have short routes and long periods for recharging. Utilities may likely need to consider distribution grid upgrades to power charging stations and possibly even furnish the equipment to charge the vehicles. Utilities may need to consider tariffs that provide incentives for consumers to recharge their electric vehicles around peak grid demand.
Community Solar Infrastructure
A community solar project is a solar power facility whose electricity is shared by the local community. The purpose of community solar is to allow members of a community the opportunity to share the benefits of solar power even if they cannot install solar panels on their property. Participants benefit from the electricity generated by the community solar farm, which should cost less than the price they would pay their utility. Several companies are popping up to provide this type of service. Utilities and regulators will need to evaluate how this impacts their business models and try to steer new projects to key locations on the grid.
Aging T&D Infrastructure
Aging utility infrastructure is not a new trend, but one that has continued since early this century. Utilities are making large investments to replace, upgrade, and maintain T&D infrastructure. This is a trend that should continue for decades and is partly driven by regulatory pressures and the need for grid reliability and hardening.
Plowing capital into infrastructure is not sexy but is a very sound and low-risk investment. Here are some interesting facts: approximately 70% of the nation’s transformers are 25 years old or more, and this equipment has an expected life of about 20 years. Furthermore, over 60% of distribution poles were installed after World War II thru the mid-1970s and are approaching or have surpassed their 50-year useful life. 70% of transmission lines are 25 years old or older and approaching the end of their useful life.
Utilities cannot replace all of this aging infrastructure at once but can strategically replace aging assets – ideally just before it fails – and rehabilitate older infrastructure such as poles and towers to extend their life. Easier said than done, but with advanced technologies and firms that provide asset-related analytics, utilities can manage their aging infrastructure while continuing to operate reliably for decades to come.
Grid Hardening & Resiliency
These terms can be loosely defined as the ability to design and plan for, or withstand, high-impact weather events. It has been estimated that the average annual cost of power outages caused by severe weather in the US is between $18B and 33B.
In addition to undergrounding, vegetation management, and stricter design standards, one key area for utilities is structural resilience, which would include methods to bolster and harden poles, towers, and other infrastructure. Grid resiliency is likely to increase for two reasons – the trend to work from home and increasing weather events due to climate change. As we have seen with the current pandemic, more and more people are working from home, and with the introduction of 5G technology and broadband access into rural areas, this trend will likely continue. For the work-from-home crowd, intolerance for brownouts and blackouts will be intense, and having reliable electricity at all times will be key. Secondly, studies show that the frequency and intensity of storms, floods, and fires due to climate change will increase. The potential economic loss from large power failures due to significant weather events can be huge. What utilities can do is to work with their regulators to create recovery models so the grid can be designed and built to withstand extreme weather conditions.
Technology Investments
Investing in technology is likely always going to be a trend for utilities, as it is with most businesses, but we are seeing a keen interest in utility-specific, operational technology projects such as ADMS, EMS, DERMS, and SCADA improvements. Utilities also need to ensure backbone technologies that support many other operational systems, such as GIS, are up-to-date and contain reliable information that mirrors field conditions. What utilities should consider is finding the right balance of technologies – and the supporting analytics and resources that run these systems – that ensure a smart, secure, and reliable grid.
In addition, some utilities are planning on how AI and ML can be leveraged to support the grid of the future. AI can help a utility develop meaningful patterns and translate them into useful and actionable insights. Examples of where AI could help a utility is preventing power outages by predicting the conditions that cause outages, or analyzing customer usage patterns from smart thermostats, smart meters, and other devices.
The industry has great potential to embrace artificial intelligence in the coming years. There are some concrete examples in the areas of load forecasting (predicting near-term supply and demand to optimize load dispatch), predictive maintenance (asset inspections to identify possible defects or unsafe conditions), energy theft (to detect typical usage patterns to identify irregular behavior), and a whole host of customer and consumption insights. Utilities should consider deploying strategy teams that identify how to best leverage these technologies to achieve real value.
Rising Customer Expectations
This is not new, and may always be considered a trend, but customer expectations continue to rise. Utilities have some catching up to do when it comes to other companies that their customers interact with (think Amazon’s high level of service). Many utilities are upgrading their technology systems in order to meet the rising demands of their customers and members. A lot of utilities have or are in the process of upgrading their old legacy systems to Software as a Service options. Many of these legacy systems were deployed a decade or more ago and were highly customized. This customization kept them from being easily enhanced or upgraded for fear of “breaking” something. Of course, SaaS options have a lot of benefits including being easily kept up-to-date. Additionally, there are utility configured advanced self service features built in to many platforms that make the customer experience consistent across multiple channels including Web, IVR, and Contact Center. Tying these systems with AMI or other data is also vital to presenting a well-rounded picture to the utility’s Customer Service Reps and the customer (such as detailed visibility into a customer’s usage). Yet this leads to the next trend…
Cybersecurity Threats
It is no secret that the energy sector has become a favorite target for cyber attackers. Most utilities, especially large IOUs, have the resources and methods to guard against such intrusions. This includes performing vulnerability assessments to determine weak areas and then implement technologies or processes to reduce those threats.
One newer area is a concept called “zero trust”, which implies “never trust and always verify” access to any network-connected device. Current utility models presume that trust is established once connected to a network. This newer approach means creating authentication at every device, including IoT devices in the field. What this may mean for utilities is to ascertain how zero trust fits in within an overall cybersecurity framework and consider investments to existing security architectures and solutions.
Edge Computing
Edge computing involves placing processing devices closer to where it is needed for analysis. For example, data from IoT devices can be sent to a nearby outpost rather than a data center located miles away. The benefits of edge computing are reduced latency and faster data analysis as well as reduced backhaul traffic, leading to quicker response times, especially when equipment repairs are required. This can also lead to a more scalable grid. A good example could be that energy consumption data from IoT devices in the field can be analyzed locally and then sent nightly to a central data center as needed to make longer-term adjustments to the grid or used for predictive purposes. This is a trend that is in its infancy in the utility domain but one we are likely to see for several years to come.
The author, Chris Testa, is a top recruiter focusing on the utility industry. He has an MBA and an engineering degree and has spent 30 years in the utility sector. He currently leads Testa Search Partners, a company headquartered in Atlanta and serves all 50 states. He can be reached at [email protected]