A decade or so ago, most of us read our news from broadsheets produced by daily newspapers while today, the delivery mechanism has evolved to where many of us receive digitally such information. That same analogy could be applied across a swath of the American economy, including those stodgy utilities that have been producing and delivering electricity the same way for last 150 years.
While more customers are capable of generating their own electricity using rooftop solar panels or micro-grids, the centralized delivery system run by utilities will remain intact for the foreseeable future. Utilities, though, won’t become complacent; instead, they will work to modernize their networks while also investing in onsite generation to maintain their revenues and market position.
“Utilities will be full service providers and the grid will be the enabler,” says David Owens, executive vice president for the
Consider that the average US household has anywhere from 15 to 25 different connected devices -- a number that is expected to double in the coming decades, says Owens. All are consuming energy, which is traveling over wires that have limited space. Utilities are therefore positioned to modernize and to expand their own infrastructures, making room for such additional capacity.
At the same time, wireless technologies and wireless energy is becoming real. Bill Pentland writes in Forbes that Swedish home furnishings company
Some may consider such innovation a threat to utilities. But others see those developments differently -- that the modern gadgets are making room for other types of electrons to flow through the electric wires, namely those emanating from remote wind farms or concentrated solar plants. More transmission capacity will also be needed to handle the expected growth in electric vehicles, which will rely on utility-produced power for fuel.
“Absent imagination, the utility industry will change dramatically,” says Brian Keane, a panelist for the Fortnightly’s conference and the president of the non-profit clean energy marketing firm Smart Power. “Utilities can have a successful brand. I would not suggest that the grid is going away but there will be advances that bypass the grid, like my Google phone that will get wirelessly charged.”
Utilities, of course, are concerned about maintenance and reliability at a time when greater numbers are generating their own electricity. However, even those who “detach” from the centralized grid must still use it to either receive electricity when the sun isn’t shining or to sell any surplus back to their power companies.
At issue is how to allocate the cost of running the transmission network, which utilities point out is $25 billion a year. The Edison Electric Institute says that fewer connected customers lead to higher costs for the remaining ones. And that dynamic could potentially cause utilities to have less revenues and greater borrowing costs that are needed for business expansion.
For those reasons, some say that the transition to more distributed generation could be “painful” for utilities. “Utilities are poised to be part of the future,” says Darren Hammell, co-founder of Princeton Power that makes energy storage devices and micro-grids. “But they may play a much smaller role and they may not have totally come to terms with potentially smaller revenues,” Hammell adds, who will also participate in the Fortnightly conference.
Edison’s Owens says that incumbent utilities are not forsaking any markets, including those associated with distributed resources. Still, other industry insiders say that their bread-and-butter will remain the current delivery mechanism:
The omni-present utility infrastructure will stay a staple of the national marketplace for decades to come. The spotlight, though, ought to be on modernizing the electrical grid and enabling power companies to better serve customers. In other words, it’s about putting as much as 20 percent more power across the existing infrastructure -- not in building additional power plants to meet ever-greater demand.
“There will be innovation. It will be distributed. But the wireless transmission of power is a ways off. Utilities are here to stay,” says Chris Hickman, chief executive of Innovari, which focuses on grid modernization, in an interview.
Just as technology has reshaped the news and communications businesses, similar developments will also modify how electricity is generated and consumed. And while the existing infrastructure will live on, utilities will either be forced or enticed to join the ongoing energy evolution.
