Navigating Change in the Evolving Energy Industry
In a recent article published by the Minneapolis Star Tribune, Stephen Byrd, a Morgan Stanley Analyst, states that the energy industry is facing the long-term problem of slow-growing, or even falling, electricity sales. In fact, Morgan Stanley forecasts a 0.3 percent decline in U.S. electric demand over the next decade (rates varying regionally). What’s driving the slow down, you ask? The answer is increased energy efficiency.
A prime industry example of how to navigate through change is Xcel Energy (Xcel). In the article, Xcel’s CEO, Ben Fowkes, talks about how his company is managing the challenges of both stagnant demand and environmental headaches. Xcel’s navigation strategy is based largely on renewable resources – in weaning itself from coal and ramping up wind power to take advantage of falling wind energy costs and federal tax incentives.
What is your company’s strategy? Big or small, Investor or Publicly Owned, a utility has to have one to successfully navigate within our evolving industry. In this post, I’ll highlight important items to consider when evaluating your company’s current strategy:
Strategic Trends – Distributed Energy Resources
A highly sustainable strategic trend is the shift from centralized generation sources to decentralized Distributed Energy Resources (DERs), which can come in many different forms such as solar Photovoltaics (PVs), and energy storage facilities. According to data from GTM Research’s Utility PV Market Tracker, the U.S. now has over 10 gigawatts of solar PV projects under construction.
DER benefits vary greatly by location and are dependent on the grid characteristics to which the units are interconnected. Some of the benefits DERs are providing to utilities include:
- Reduced peak-demand charges and grid losses achieved by providing power closer to the customer and by reducing peak loads
- Additional Volt/Voltage and Reactive (VAR) support achieved either indirectly or directly through the use of inverters and reactive power controls
- Deferred generation, transmission, or distribution capacity needs through peak load reduction
- Increased grid ancillary services, such as selling reserves and capacity services in wholesale markets
- Reduced emissions
- Improved grid resiliencyby providing direct service to consumers during outage or power quality events, or potentially supporting restoration processes
- Increased fuel diversity, which improves energy security
- Decreased energy production or purchases
The Emergence of Microgrids
Microgrids can offer compelling benefits, as well. Microgrids are defined generally as discrete energy delivery systems able to connect and disconnect from the grid and to operate in grid-connected or island mode. Electric Light and Power reports that microgrids can enhance end-use consumers (e.g., hospitals, fire departments, military bases, supermarkets, large commercial and industrial customers, campuses, apartment buildings, and community-based microgrids) to island and maintain operations during grid outages, and/or obtain various other benefits. Energy security and resiliency measures can ensure uninterrupted service in most instances, even in the face of extraordinary weather events.
Managing Distributed Energy Resources
These new forms of behind-the-meter generation, including microgrid fleets, might seem like daunting shifts to a utility’s grid operation, but they don’t have to be. A Distributed Energy Resource Management System (DERMS) will provide a new set of tools to manage the technical, operational, and economic challenges of harnessing and optimizing interconnected DERs. When properly connected to utility grid operations with secure, two-way communication for real-time observability and command and control, they can be easily harmonized, scheduled, and dispatched. Moreover, a robust DERMS will also manage the various forms of Demand Response (DR), provide for Conservation Voltage Reduction (CVR), and be able to incorporate traditional forms of generation and purchased power for advanced optimization.
Are the changes in our industry causing you to reevaluate your company’s current strategy? I’d love to hear from you! Contact me today.
About the author:
Linda Stevens is Senior Director of Sales for OATI’s grid modernization solutions. She holds a Bachelor’s Degree in Organizational Management and Leadership from Concordia University, St. Paul, Minnesota. Ms. Stevens has dedicated her career to the energy industry. She began in an Investor Owned Utility where she learned firsthand about utility operations. This experience transitioned to an energy industry software and technology sales career path with Siemens and, eventually, to OATI. Through a network of direct OATI sales executives, key technology alliances, and an industry leading distribution channel, she drives the strategic sales initiatives for OATI’s grid modernization (or Smart Grid) portfolio, with an emphasis on solutions for cooperatives and municipals.