Key Trends Driving Change in the Electric Power Industry
Total Page:16
File Type:pdf, Size:1020Kb
THOUGHT LEADERS SPEAK OUT: Key Trends Driving Change in the Electric Power Industry THOUGHT LEADERS SPEAK OUT: Key Trends Driving Change in the Electric Power Industry Edited by: LISA WOOD Vice President, The Edison Foundation Executive Director, Institute for Electric Innovation with ROBERT MARRITZ Editor & Publisher, ElectricityPolicy.com December 2015 IEI thanks Jon Blansfield, Adam Cooper, Tyler McLeod, Niki Nelson, TD Smith, and Stephanie Voyda for their contributions. © 2015 by the Institute for Electric Innovation All rights reserved. Published 2015. Printed in the United States of America. No part of this publication may be reproduced or transmitted in any form or by any means, electronic or mechanical, including photocopying, recording, or any information storage or retrieval system or method, now known or hereinafter invented or adopted, without the express prior written permission of the Institute for Electric Innovation. ATTRIBUTION NOTICE AND DISCLAIMER This work was prepared by the Edison Foundation Institute for Electric Innovation (IEI). When used as a reference, attribution to IEI is requested. IEI, any member of IEI, and any person acting on IEI's behalf (a) does not make any warranty, express or implied, with respect to the accuracy, completeness, or usefulness of the information, advice, or recommendations contained in this work, and (b) does not assume and expressly disclaims any liability with respect to the use of, or for damages resulting from the use of any information, advice, or recommendations contained in this work. The views and opinions expressed in this work do not necessarily reflect those of IEI or any member of IEI. This material and its production, reproduction, and distribution by IEI does not imply endorsement of the material. Published by: The Edison Foundation 701 Pennsylvania Avenue, N.W. Washington, D.C. 20004-2696 Phone: 202.508.5440 Website: www.edisonfoundation.net TABLE OF CONTENTS Table of Contents INTRODUCTION ...............................................................................................................................3 Lisa Wood, Vice President, The Edison Foundation & Executive Director, Institute for Electric Innovation CHAPTER 1: TRANSITION TO A CLEAN ENERGY FUTURE ....................................................7 Using the Full Energy Portfolio ....................................................................................................9 Thomas A. Fanning, Chairman, President and CEO, Southern Company Modernizing and Decarbonizing the Grid From the Outside In .......................................13 Nancy Pfund, Managing Partner, DBL Partners & Mark Perutz, Partner, DBL Partners Clean Energy is Good Business ..................................................................................................17 Frank Prager, Vice President, Policy and Federal Affairs, Xcel Energy An Energy Road "Less Traveled By" Begins With Solar .......................................................21 Tom Werner, President and CEO, SunPower CHAPTER 2: DIGITAL AND DISTRIBUTED GRID .................................................................... 25 In the Transformation of Smart Grids Into Smart Cities, the Only Limit is Imagination ......................................................................................................27 Scott Lang, Executive Chairman, Silver Spring Networks Building Tomorrow's Digital and Distributed Power Grid Today .....................................31 Pedro J. Pizarro, President, Southern California Edison & Erik Takayesu, Director, Electric System Planning, Southern California Edison How the "Internet of Energy" is Driving the Digital and Distributed Power Grid .......35 Thomas M. Siebel, CEO, C3 Energy Leading at the Edge of the Grid: An Integrated Platform for the Future .......................39 Rodger Smith, Senior Vice President and General Manager, Oracle Utilities CHAPTER 3: INDIVIDUALIZED CUSTOMER SERVICES ........................................................43 No More Average Customers .....................................................................................................45 Ron Binz, Past Chair, Colorado Public Utilities Commission Putting the Energy Puzzle Pieces Back Together ..................................................................49 Mary Anne Brelinsky, President, EDF Energy Services Making Energy Personal ..............................................................................................................53 Tony Fadell, Founder and CEO, Nest Labs Residential Electricity Service in 2025 ....................................................................................57 Peter Kind, Executive Director, Energy Infrastructure Advocates LLC Unlocking Value Through Customer Engagement ...............................................................61 Alex Laskey, President and Founder, Opower CONCLUSION ................................................................................................................................. 65 Bob Rowe, President and CEO, NorthWestern Energy 1 As this transition “unfolds in the regulated electric power industry, it is about balancing affordability, reliability, clean energy, and individualized customer services. —LISA“ WOOD 2 INTRODUCTION Introduction LISA WOOD Vice President, The Edison Foundation and Executive Director, Institute for Electric Innovation merica's electric utilities—which has already reduced carbon dioxide provide the critical infrastructure emissions 15 percent below 2005 lev- thatA enables all other infrastructures— els; other emissions have also been are at the beginning of a profound but reduced. At the same time, moderniza- quiet transformation. That transforma- tion and digitization of the grid enables tion, more evolutionary than revolution- the integration of more carbon-free ary, is largely invisible but it is underway renewables, both large-scale and dis- and is being driven largely by: tributed. In fact, we expect exponential Technological innovation; growth in solar over the next decade, Federal and state policies that in all sizes. Wind energy, already com- favor competition in some aspects petitive with other fuels, is projected to of providing electricity service; increase substantially as tower heights Regulation of the non- increase to produce more energy. competitive components Today, the electric power indus- of electricity service; and try is the largest investor in carbon- Changing customer needs free renewable energy in the U.S. and increasing expectations. A more digital and distributed grid KEY TRENDS DRIVING CHANGE The power grid itself is changing, Three "megatrends" are at the core of becoming "smarter" by virtue of a digital this transformation. communication overlay, with millions of sensors that will make the grid more con- The transition to a clean energy future trollable and potentially self-healing. The energy mix we use to generate elec- The electric power industry is invest- tricity is changing. By investing in renew- ing more than $20 billion per year in able energy, transitioning from coal to the distribution grid alone, which will natural gas, and pursuing energy effi- enable the connection of distributed ciency, the U.S. electric power industry energy resources as well as devices 3 INTRODUCTION in our homes and businesses. Many regulation evolves to accommodate of these resources and devices will these changes. Just as the business interact with the grid, resulting in model of electric utilities must change more efficient grid operations. The because the power mix is undergoing digital grid is evolving into a multi- transformation, the grid is more com- path network of power and information plex, and customers have different flows that will use data analytics for grid expectations, so too must the regu- management and optimization from latory model change. Regulation will end-to-end. have to provide a glide path for utilities to achieve corporate and policy goals, Individualized customer services while also setting incentives and pen- As the grid becomes increasingly dig- alties for utilities based on meeting ital and distributed, customization of agreed-upon performance objectives. services for electricity customers will continue to grow. Here are some exam- THE NEXT DECADE ples. Large commercial customers Many of us would agree that, a decade increasingly want renewable energy from now, the U.S. electric power indus- to meet their corporate sustainability try and energy services will look some- goals. Cities and towns are request- thing like the following: ing customized services such as help We will have a cleaner electricity with micro-grids, smart city services, generation mix, with lower or renewable energy. Some residential carbon emissions; customers want rooftop solar to gener- The power grid will increasingly ate their own electricity. And, residen- integrate a mix of central and tial customers increasingly want to man- distributed resources; age their energy use using connected The grid will become more digital, devices like iPhones and Nest Learning more controllable, and more inter- connected. PG&E aptly calls this Thermostats, and through web-based the Grid of Things™; platforms. At the same time, for many, many customers, safe, reliable, and A mix of entities—both utilities and other companies—will provide dis- affordable electricity will continue to tributed energy resources both on be the preferred service option. the supply side and the demand Although