What does the utility of the future look like anyway? The discussion topic is not a new one. Over the last twenty-five years, we have seen the era of deregulation, renewable portfolio standards and the investment in utility-scale renewables, the build out of the smart grid and retirement of coal fired plants. With the development of shale gas, the decline in consumption, the need to invest in infrastructure and the rise in distributed energy resources (DER), the discussions have evolved. There are a limited number of venues where utilities can come together to discuss the outlook for the industry. The Utility of the Future Leadership Forum sponsored by DNV KEMA has discovered the formula for lively, honest and informed discussions in an intimate setting.
The 6th Annual Utility of the Future Leadership Forum is based on a panel format where an impressive set of industry leaders and thought leaders are brought together to give their views on such topics as the outlook for business, renewables and alternative energy, the expanding role of natural gas and customer engagement. So for example, the opening panel was populated by the CEO of AEP, a Director and Senior Economist at Wells Fargo, the President and CEO of BG&E, the Vice President of Regulatory Affairs at ConEd and the Chairman and CEO of Oncor. And that was just the first day.
The most thought provoking idea that emerged from the opening panel is that the technology-enabled customer may be by-passing the regulators. It used to be that regulatory bodies served as the intermediary between the customer and the utilities, setting rates and direction for utilities. But now the utilities are hearing directly from the customer base en masse. Take Super Storm Sandy, where the utility heard via social media and other means directly from thousands of customers almost immediately. Regulators don't and can't move as quickly.
There was a bit of a debate as to whether or not a significant swath of customers will be able to communicate with the utility by opting out of service altogether. There are more options for the customer to access DER, either through owning them or through buying power from third party providers of solar. These providers make their money on resources that are at grid parity and through the sales of renewable energy credits (RECs). And there is certainly a growing interest in the development of micro-grids, not just for "green" but also for reliability and resiliency.
So what is the modern utility do with this, given that the utility industry is the most capitalized in the industry? Where does the money for needed infrastructure to support both central source and distributed energy come from? Should there be a mechanism for awarding a higher rate of return for investment in a smarter distribution grid? There was not general agreement on whether DER is a significant threat. But there was general agreement that there is a need for utilities to continue to invest in distribution infrastructure to minimize downtime and make the grid more efficient through advanced technology. And maybe even making DER part of that efficiency.