Push and Pull: how do we help regulated utilities adopt distribution grid tech better and faster?
Luminary Strategies, LLC
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If your name is:
Carmen Best Michael Murray Greg Nettleton Andrew Price Liz John Doug Lewin Lynne Kiesling Allison Bates Wannop Jonathan "J.T." Thompson Arshad Mansoor then I believe you may greatly identify with pretty much all of this.
Less than third of over 400 people who are utility company leaders think that solution and innovative technology providers will help them navigate what is coming. Just over half think their regulators and governments are more worthy partners. This kind of finding makes my head spin, until I remember - oh, we have allowed monopolies to be monopolies.
Be that as it may: I think utilities are worrying too much about regulators and thus are ill-equipped to grasp how quickly they could adopt software, hardware, and data management tool in their backyard, fostered through the massive innovation drive of decentralized SaaS and customer choice providers, whether it is smart meter data access to support energy efficiency programs or figuring out how much headroom is on a transformer so that interconnecting DERs and EV charging stations can be located sensibly and managed in real-time as load flexibility assets.
In this article, I will be a little path-breaking. I will discuss the view that utilities dropped the ball on innovation entirely around the time of PURPA, using California's dereg experiment as the narrative. Then I will note in various buckets of issues, various culture shifts, culture constraints, and Catch-22’s. At the end, is a bulleted to-do list for vendors, utilities, and regulators.
Some food for thought:
“[A]t least $1 billion will be invested annually in advanced distribution management systems by 2035 to improve grid reliability in North America.?
At the same time, innovations in CE/CX technologies point to a digitally enabled flexibility transformation across the grid edge ecosystem.
Investments in behavioral and structural energy efficiency technologies that interact with behind-the-meter technologies like electric vehicles represent an exciting opportunity for utilities to better tailor incentives for their clients.
An estimated 90% of North American homes will be served by customer engagement and experience analytics programs by 2030, increasing from around 65% today.”
Introduction
Electric distribution utilities face significant challenges in adopting and integrating new technologies to modernize the grid and improve operations. Regulatory constraints, organizational inertia, procurement processes, and funding models impede technology deployment. There are however emerging opportunities and strategies to accelerate adoption, including regulatory reform, new partnership models, and innovative financing approaches.
PURPA Culture & California’s Dereg Frenzy Led to Enron, Left Utilities Behind on Software Tech
In a little twist, PURPA began an era of attitudinal shift what utilities should be able to do as innovators vs. third party innovators: this was not productive in that it precluded the essential hauling of monopoly energy providers into a modern era. Sometimes, a historian can tell it best. For this story, it is electricity historian Dr. Gretchen Bakke and the particular leave-them-out effort in question, is California’s deregulation mandate in 1998, a piece of legislation that was “litlte more than a remarkable series of loopholes twisted through with some regulatory language…”
Bakke writes that “PURPA cracked open the utilities’ monopsomy control of the grid” and intitiated a grand phase of the end of of their writ-large natural monopoly over the means of production and delivery of electricity. However, “it did not change…the prevailing attitude” of lawmakers and the utilities that the only way to exert control over the behavior of the utilities was “through requiring absolute adherence to whatever happened to get legislated. Over time, this culture of obligation has had the unfortunate effect of making the utilities even less capable of adapting to the rapidly changing electricity landscape…”
When California implemented their pre-EPACT deregulation state bill, it obligated utilties to strict regulatory compliance and they also encountered the dual whammy of the internet and non-utility companies cow-boying into the technology software space that boomed alongside. The lopsided adoption of technology innovation freedoms provided by California law conferred benefits to third-parties but not to utilities; which allowed Enron to become a premier name in online energy futures and spot market commodity trading. Their schemes, as Dr. Bakke writes, include fun games with power like “Death Star”, “Ricochet”, and “megawatt laundering.” Aside from Enron, “smaller companies in San Francisco were doing the same or very similar kinds of transactions….”. Dr. Gretchen Bakke, The Grid.
Enron led to Commercial and Industrial Grid Defection in 2001 - a Missed Opportunity for CA Utilities to Serve Large Loads and Advance their Grid Tech
In 2000-2001 as California faced the reckoning of these market manipulation impacts and rolling blackouts, the folks with the most to lose, the largest Value of Lost Load numbers backed by revenue numbers, began to take action to create self-reliance. Bakke writes that “many new economy businesses, like Apple and Cisco Systems, as well as other electricity-dependent undertakings such as military bases and prisons, began to think about ways they might detach themselves from grid-provided power.”
Bakke explains that institutional grid defection in the wake of 2000-2001 signaled that smart companies were engineering ways to “use the grid as a backup power system rather than as something upon which they must rely regardless of how poorly it was managed or how sporadically its product was delivered.”
Excerpts and Research Citations: Dr. Gretchen Bakke, The Grid, Chapter 4, pp. 114.
Eyeballs Wide in 2024: So Many Constraints, So Little Time
Technology is advancing at the speed of sound compared to the rate of government regulation of technology. This makes catch-up hard. What if I told you, that utilities’ staff believe that they are far behind even government? For them, technology innovation is occurring at the speed of light, and catch-up is not a reality. Better to catch the light, and throw out the oil lamp.
Throwing out the old stuff and bringing in the new, is incredibly difficult. A small history lesson on California alone, should bear on the thoughts you develop on this topic. I describe it as a Catch-22: damned if you do, damned if you don’t. Let’s dig into the challenges. Visit the Substack and grab a drink for a "seven minute read."
(Excuse Typos, which these days, should charm you into knowing no bots write my work).
- Arushi Sharma Frank
Net Zero Grid, MassCEC
5 个月Phew... great summary! I'll be joining Lynne Kiesling at her annual workshop in a few weeks - in part motivated by the realization of all of these factors that are inhibiting innovation on the grid. MA is probably doing better than some many other states, but man could we also improve!