For utility leaders tasked with providing reliable and affordable electricity at every moment of every day, rapid change can be a daunting challenge. And our grid is certainly evolving quickly.
The specific flavor of change differs from one community to the next, but in interviews with more than 30 utility leaders from organizations large and small, five challenges stood out as most top-of-mind for utilities across the United States.
By 2023, retail electricity prices are expected to have increased more than 10% since 2021. Rising wholesale power supply costs are a major driver, influenced by higher natural gas prices, increasing demand, and economy-wide inflation.
“In the last three or four months, we've seen a near doubling of purchased energy costs, mainly driven by natural gas.”
Distribution Co-op CEO
For utilities planning to invest capital expenditures to replace aging infrastructure or prepare for the impacts of electrification, rising power supply and equipment costs create a significant hurdle.
These utilities are often forced to make difficult tradeoffs between important investments in their grid and affordability for their community members. As a result, utility leaders feel the pressure to better prioritize capital budgets and find opportunities to lower operating expenses.
2. Electric Vehicle (EV) Readiness
As auto manufacturers release 70 new electric vehicle models and state and federal incentives buoy EV adoption, the number of EVs on the road continues to increase.
If not managed, Level 2 EV chargers can increase a home’s peak load by 40% - 100%. That increase can stress transformers and compromise reliability.
Many utility leaders told us that they feel less equipped than they need to be to prepare their grids to accommodate EV charging. They pointed to several examples:
- Lack of visibility into member EV adoption: In most states, residential EV owners are not required to notify their utilities about charger installations. Estimates from our interviewees put the number of “invisible” EV chargers as 1-2x the number of chargers currently enrolled in a utility’s EV program.
- Cost increases from higher peak demand: Several utilities expressed concern that unmanaged EV charging loads during peak periods could significantly increase their power supply and infrastructure costs.
- Limited awareness of upline grid impacts: Numerous interviewees reported a lack of visibility into voltage conditions and loads at transformers and other midline equipment. As EV adoption changes load profiles, understanding the impact on midline equipment is crucial to ensure reliability. Without visibility, utilities may be forced to overspend on overly-conservative upgrades for thousands of pieces of equipment.
Put simply, distribution utilities want to be better equipped to prepare their grids for EV adoption and do so in a fiscally responsible way.
“People can go out and buy an EV, and next thing you know, you've got a neighborhood that has eight or ten of them. But you still have your old transformers out there.”
Distribution Planning Engineer
3. Growth of Distributed Solar
In our interviews, utility leaders pointed to a growing set of challenges associated with the interconnection of distribution-connected solar.
At the residential level, many utilities lamented that third-party contractors frequently install systems incorrectly, leading to angry calls to the utility and sometimes power quality issues for neighbors. Oversizing of systems, usually thanks to overzealous solar sales teams, also contributes to unhappy customers and angry phone calls.
“Validating [solar inverters] is a massive challenge because we're not able to commission every single solar facility. We just don't have the resources.”
Despite these challenges, residential solar continues to boom in regions around the country, leading to growing interconnection queues. Several utilities told us that they don’t have the ability to quickly assess the grid impacts of proposed interconnections – instead relying on time-intensive studies for even small-scale projects.
Even for utilities with more advanced interconnection analysis capabilities, the 40% increase in year-over-year residential solar adoption is creating a long to-do list for utility team members.
4. Putting Data to Good Use
A tidal wave of data is collected from smart meters, distributed energy resources, and new monitoring devices every few minutes. Utility team members frequently pointed to the challenge of figuring out how to take a massive amount of data and turn it into actionable insights.
To make matters more difficult, many critical utility datasets are not interoperable with one another. Few of our interviewees had moved towards a standard data model that is easily accessible across teams. Some utilities told us that they use different applications across different teams, making data-sharing and analyses slow and painful.
Interviewees expressed a desire for a shared platform that puts forward structured, high-quality data and makes it available to be used throughout the organization. Without a shared platform, teams spend more time cleaning, processing, and deciphering data than analyzing it.
“We're engineers. We're not database people. How do we take all of this data and turn it into something usable? And then how do we integrate all of these new data sources too? That’s our big challenge.”
System Engineering Manager
5. Treating Consumers As Partners
In interviews with utilities known to be particularly forward-thinking, a consistent challenge emerged: how can utilities navigate the changing role of consumers?
From Hawaii to Maine, distributed energy resource aggregators are exploring how local energy devices can participate in our power systems and earn compensation. Utilities are facing a meaningful shift as consumers become partners.
In several interviews, the concept of a Distribution System Operator (DSO) arose as a model for how utilities can manage more distributed and participatory systems. These utilities want a way for local energy resources to offer services to wholesale markets as well as to support the distribution system.
As local energy resources more frequently serve as key sources of capacity and alternatives to new infrastructure investments, the role of the consumer (and DER owner) will continue to evolve. Utilities focused on this DSO future are feeling the need to invest in technologies and programs that can evolve alongside the role of the consumer.
“We want to be our members’ energy provider and partner of choice. Today we sell energy, capacity, and grid services. In the future, we're going to be buying grid services. With behind-the-meter devices, we're going to be buying capacity from our members.”
Distribution Cooperative CEO
Putting it all together: What can utility leaders do today?
The experiences and insights from those who've started tackling these challenges offer valuable lessons.
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