Smart grid challenges: Annual survey reveals a worried industry

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By: SGN Staff

Black & Veatch is out with its annual survey of utility executives. As you read through the release on Page 2 of this article, I predict you'll find few surprises. (Or click the link to download a copy of the survey.) But even though you know most of this already, it's nice to see it confirmed and validated. You're not in this alone -- your fellow utility professionals are feeling the same pain. - Jesse Berst

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Black & Veatch’s seventh annual U.S. electric utility industry survey revealed that executives are pre-occupied with a wide range of issues. We noted these key findings.

·         Yes, we really are in turbulent times. It's not just in your head -- these really are challenging days for the utility industry. Dean Oskvig, President of Black & Veatch’s global energy business, put it this way: “... major shifts are occurring just as the industry embarks on a new round of unprecedented capital spending addressing concerns over aging infrastructure, reliability and resilience.”

·         Reliability is top of mind.  It has always been that way, but the recent spate of storms and disasters has made it even more of a concern.

·         Rate cases are getting more worrisome. Rate recovery jumped from 9th to 3rd on the list of top issues.

·         The smart grid marches on with most utilities planning to expand or start grid modernization in 2013, despite the concerns about getting regulatory support. Advanced metering infrastructure is the leading area, followed by demand response and fault location, isolation and restoration.

·         Carbon regulation continues to scare us even though there's little prospect of federal legislation.

·         Renewables are achievable with only 3.4% believing that technical issues will prevent them from hitting RPS mandates.

·         Distributed generation is growing in popularity and more and more industrial customers and looking to produce electricity on premises.

 

And here's a tidbit for those watching the debate over whether and how to employ cellular networks. More than two-thirds think telecomm networks will be important or very important to their future operations.

Black & Veatch report: Anxiety levels rising for electric industry leaders

OVERLAND PARK, KAN. (8 May 2013) – Key findings from Black & Veatch’s seventh annual U.S. electric utility industry report show rising levels of concern across the industry for a broad range of issues. Once again reliability was the top-rated industry issue.

 

“This year’s report reflects the views and outlooks of an industry in transition,” said Dean Oskvig, President of Black & Veatch’s global energy business. “From the lack of clarity in energy policy to disruptive effects of unconventional gas supply, major shifts are occurring just as the industry embarks on a new round of unprecedented capital spending addressing concerns over aging infrastructure, reliability and resilience.”

 

The 2013 Strategic Directions in the U.S. Electric Industry Report focuses on factors impacting utility operations, power generation and power delivery. Highlights include:

 

ï‚·     Predictable recovery of operating and capital costs through appropriate economic regulation jumped from 9th to 3rd on the Top Ten Industry Issues list

ï‚·    Carbon regulation is top of mind with more than 70% of respondents expecting action--either state or federal-- within the next 8 years

 

ï‚·    Most utilities are planning to start or expand smart grid programs in 2013. However, the industry continues to struggle with justifying program costs to regulators. Competing capital investment programs also represent a major challenge.

 

ï‚·     Low Natural Gas prices are expected to stimulate significant new demand for the commodity. However, many industry leaders, particularly in the northeast, remain concerned about local volatility in gas prices and long term price certainty. Gas transportation, its availability and reliability, is also seen as a potential weak link in the fuels value chain.

 

ï‚·     Only 3.4 percent of respondents believe that meeting renewable portfolio standards (RPS) is not achievable due to technical considerations. However, opinions still vary widely on the ultimate rate impact consumers will have as a result of meeting RPS.

 

ï‚·    Distributed generation; that is, power generating assets with a capacity of less than 20 megawatts often located close to end users, is growing in popularity. Low gas prices and rising conventionally generated electricity costs are improving the business case for industrial and manufacturing companies to produce electricity themselves on their premises.

 

“The Report's findings show the industry is at a tipping point,” said John Chevrette, President of Black & Veatch’s management consulting division. “Industry leaders must come to agreement on how to best manage the competing goals of delivering safe, reliable service while minimizing the cost to consumers. Sound asset management programs on the utility-side with predictable practices and decisions on the regulatory side can help bring down anxiety levels.”

 

About Black & Veatch
Black & Veatch is an employee-owned, global leader in building Critical Human Infrastructureâ„¢ in Energy, Water, Telecommunications and Government Services. Since 1915, we have helped our clients improve the lives of people in over 100 countries through consulting, engineering, construction, operations and program management. Our revenues in 2012 were US$3.3 billion. Follow us on www.bv.com and in social media.

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