Increased investment, technological advances, and improved communication are essential for electricity grids trying to embrace the energy transition against the backdrop of more frequent extreme weather events, according to a webinar panel hosted by Publicis Sapient and the Utility 2030 Collaborative earlier this month.
“We find ourselves in an experience where we are dealing with [climate change] now,” said Ahmad Ababneh, vice president, electric operations major projects and programs at Pacific Gas & Electric. “It’s not a matter of preparing for climate change—it’s here. So it’s a matter of adapting to it and figuring out what we need to do, short-term and long-term.”
Extreme weather events attributed to climate change were nothing if not conspicuous in 2021 and utilities are feeling the damage. In the U.S. alone, the sector faces US$4.1 billion in costs associated with repairs from the year’s climate hazards, noted The Energy Mix Publisher Mitchell Beer.
Utilities received prominent media coverage for their capacity to sustain output during critical incidents, like the winter storms and deep freeze in Texas that left people without power when demand for home heating was at its highest. During the initial period of uncertainty following the event, public conversation about grid reliability cast renewable energy in a negative light, even though the problems ultimately mapped back to regulatory failures to winterize power sources that were primarily powered by natural gas, said James Riley, chair of Utility 2030’s Customer Experience Incubator.
Similarly, an extreme heat wave pushed California’s grid over the edge as it drove up energy demand to power cooling devices. The geographic extent of the heat wave posed a major challenge for the state, Riley said.
“Normally, if California doesn’t have enough generation to meet demand, [utilities will] borrow power from neighbouring states,” he explained. But because those neighbouring states were also struggling to supply power, “California had to institute blackouts, which affected customers.”
Extreme weather events are not just affecting current utility operations, the panel said. They also interact with the energy transition, leading to different views on whether fossil fuels contribute to or detract from grid reliability. Fossil fuel proponents point to the intermittency of renewables. But energy transition advocates note that fossil fuels have their own reliability issues, and are also part of the root cause aggravating the extreme weather conditions that are threatening reliability in the first place.
“As we said earlier, major burning of fossil fuels creates climate change,” said Riley. “Utilities burn a lot of fossil fuels to generate electricity. So we’ve got a well-established relationship there. That’s why we’re looking at energy transition. And you could say without energy transition, extreme weather events are only going to get worse.”
Publicis Sapient Director and Industry Principal Supratik Chaudhuri said utilities overall agree that there is a relationship between extreme weather events and the energy transition. A key next step is to gather and use data to target resources and facilitate communication between utilities, field staff, and customers.
“The big challenge in the industry really is about connecting the asset, and workers in the field, to the customer,” said Chaudhuri.
Although no one thinks about utilities when everything is going well, they’re a critical resource—and a critical source of information—in an emergency, Chaudhuri added. “Being able to communicate to the customer, and letting them know what exactly is going to happen, is really important,” he said. “The one thing that customers are looking for when there’s an emergency situation is certainty.”
Riley said the events in Texas and California demonstrated why investing in long-term energy storage is critical to maintain grid reliability—a point he returned to several times during the panel.
“Ultimately, storage has got to be a very big part of the answer,” he said. “It enables you to offset the intermittency risk around renewable generation,” averting the problem that faced the isolated grid in Texas when it couldn’t import significant amounts of electricity to maintain stability during the deep freeze.
Beer agreed, but added that the first step is to improve efficiency and reduce demand before deciding how to supply the electricity customers still need.
A study in Canada last year “found that near-zero retrofits for every home and commercial building in our country could be completed by 2035 if we organize it right, and that that activity would free up 50 terawatt hours of electricity,” Beer said. “That’s enough to power 10 million electric vehicles with no need for a stitch of new supply.”
That pathway would require action on a mass scale, not just incremental changes, he cautioned. But if the shift were accompanied by institutional and regulatory changes, it could “help utilities turn the threat that so many of you perceive in the energy transition into an opportunity.”
Ababneh stressed the need for a strategic, integrated planning process to prepare for risk and mitigate the root causes of unreliability, citing prediction and prevention as the “core strategy for reliability. Reliability, at the end of the day, is to provide uninterrupted service to our customers and do it safely.” He said the utility industry must make better use of weather and risk models, data, and analytics, and prioritize targeted infrastructure investments in underground microgrids, non-traditional wires alternatives, and better storage.
The physical risks of climate impacts, coupled with utilities’ potential to reduce greenhouse gas emissions, have led to public policies aimed at shifting power grids away from fossil fuels. Panelists said utilities in areas already facing extreme weather are beginning their own transition to new grid policies.
But momentum within the industry will still need to overcome substantial challenges to make the transition happen, and Riley cautioned that the changes won’t be inexpensive.
“It’s not just a problem utilities face,” he said. “We all face this problem. It requires massive investment, whether it’s investment in energy storage, investment in building new generation capacity, investment in new infrastructure to transmit other fuel sources, or investment to make the grid across North America more resilient.”
Beer said the financial sector is showing greater interest in investing in the energy transition, but utilities will need a longer-term view to factor in the cost savings those investments will produce.
For now, Ababneh said, it’s still hard for renewable energy to compete dollar for dollar with fossil fuels. But utilities must also factor in the other values—like air quality, land value, and power quality—gained from converting existing fossil fuel assets.
“We have to start looking at new resources beyond just the energy cost,” he told participants, “and look at all that additional value. That’s how you make the business case.”
New technologies will be an essential part of utilities’ future, panelists said. Advances in areas like cloud security and blockchain will be critical to introducing new processes and approaches, along with improved energy storage and new methods of evaluating risk.
A successful decarbonization effort will also depend on better communication and relationships with customers.
“If customers see the relationship with utilities as transactional, and as long as [utilities] see it that way, it won’t be easy to earn and retain their trust,” said Beer. “But if they come to see you as a service provider that is trying to help them do well, trying to reduce their energy costs, cut their emissions, and help them weather the next extreme event by anticipating and preparing for it,” the transition will be more achievable.