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Technology and policy shifts are prompting changes in electric industry, experts say

June 24, 2015 By Finley Engineering in

Profound change is happening in the electricity industry, “whether utilities or governments want it” or not, Kate Burson, an aide to New York Gov. Andrew Cuomo, said June 23. Burson spoke in Washington, D.C., at a forum on energy that was organized by the Washington Post as part of its “America Answers” series. The June 23 event, the third in the series, was entitled “Powering Cities” and was sponsored by the Edison Electric Institute, the National League of Cities and energy company WGL.

“Right now, utilities are incentivized to spend more capital,” said Burson, chief of staff to the chairman of energy and finance for the state of New York, at a session called “Unlocking the Grid.” Rather than encourage spending, “we’d like to see cleaner power at less cost,” she said.

In New York, “we’re changing the price signals to incentive greater efficiency,” Burson said. “Our drivers are affordability, clean energy, and resilience.”

“There’s a set of technology shifts, combined with pressure from the public, to unbundle the utility industry,” said Evan Burfield, cofounder of 1776, a Washington, D.C.-based startup incubator.

The electricity industry in the United States developed a grid and a power generating system “that has tended to be very centralized,” Burfield said. But today, “unbundling is happening,” with energy storage, in particular, “becoming a factor in a way it wasn’t before,” he said.

“This opens up tremendous opportunities for innovators,” Burfield said. His company, 1776, describes itself as “a global incubator and seed fund helping startups transform industries that impact millions of lives every day—education, energy and sustainability, health, transportation and cities.” In energy, the underlying technologies “are transforming at a very, very rapid rate,” Burfield said. Pointing out that the electric utility industry is very complex and is highly regulated, he said that utilities are, traditionally “not the easiest” entities for startup companies to engage with. But he said that is “starting to change, because utilities are starting to realize the imperative to change their business models.”

Opportunities exist “up and down the stack,” he said, with the price of solar power dropping, and with opportunities emerging for other renewable and distributed resources. Utilities are realizing that they “need to get ahead and plan their future, instead of someone doing it for them,” Burfield said. Often, for fledgling technologies, “the biggest challenge is how do you even get a pilot project,” he said. He cited the New York State Energy Research and Development Authority, saying that “programs like NYSERDA are very important.” He added that he believes “more and more cities … are trying to become more open and more innovative, to provide these opportunities to pilot.” In New York, “we don’t want to be deterministic on technology,” Burson said.

She cited the example of a New York City investor-owned utility, Consolidated Edison, which said it needed to build a new substation in the Brooklyn /Queens area. State utility regulators told the utility to look at other options. Now it appears that the utility will be able to combine a few options — such as demand management, distributed generation, and energy storage — to accomplish the same goal, she said. “We’re trying to create greater competition around the customer,” Burson said. “We use the analogy of the utility being like a tablet or iPad,” with distributors acting like apps. The innovator can sell something to the customer and also “give the utility something that will help them achieve their goals,” she said.

“We see the grid as incredibly valuable,” she noted. “We don’t want to see people pulling off it.” A large dose of oversight will be needed at state and federal levels, Burson noted. “We believe in private markets but also in really smart regulation,” she said. The speakers were asked to discuss security concerns that could affect the grid, and whether the current trend toward decentralization might affect security.

“Our old grid — one of the best qualities about it is that it’s analog and very hard to break into,” said Burson. The worry over cyber security “is something that every large corporation and every country is dealing with.” Concerns about the physical security of the grid should not be underestimated, either, she added. In energy, as in other fields, “as you create more interconnected systems that are more open to customers, you are also open to risks,” said Burfield. Distributed nodes “are not necessarily more risky” than centralized ones, he said, citing the recent discovery by the Office of Personnel Management that hackers had broken into its records and stolen the personal information of millions of federal workers.

“How are you engaging customers?” asked the moderator. “The way you’re going to achieve scale and make a difference is to figure out what people want,” Burson replied. Energy is seen “as a backbone to what people want,” she added.

A public power utility, the New York Power Authority, has been working with Gov. Cuomo to bring about changes in the state’s electric system. The governor announced earlier this year that NYPA has signed an agreement with the SUNY Polytechnic Institute “to create a world-class facility devoted to energy technology innovation and the rapid deployment of smart-grid technology to modernize New York’s electric grid.” The facility, to be called the Advanced Grid Innovation Laboratory for Energy (AGILe) “will simulate, develop, test and deploy a more integrated grid,” the governor’s office said in a news release, noting that the facility will be the largest research and development lab of its type in the world.

“The entire power system is changing at a fast pace, driven by technology and customer expectations,” said NYPA President and CEO Gil C. Quiniones. “AGILe will represent a quantum leap forward in realizing the full value of central generation and transmission and distributed energy resources.”

Quiniones was recently elected as chairman of the Electric Power Research Institute.