Reliability and cybersecurity ranked as the two most important issues currently confronting the electric industry, according to surveys completed by 672 qualified utility, municipal, commercial, and community stakeholders for Black & Veatch’s “2016 Strategic Directions: Electric Industry Report.”
It’s not particularly surprising to see reliability rank at the top of the list.
“Reliability has always been—I’m sure always will be—a cornerstone of owner-operators,” said Ed Walsh, president of Black & Veatch’s power business, during an interview with POWER. Walsh noted that maintaining 24/7/365 service is paramount to preserving customers’ confidence.
New Challenges Emerge
Yet, while maintaining reliability has remained a consistent challenge, a lot of other things have changed since Black & Veatch began conducting its annual electric industry survey 10 years ago. Back then, coal was king, physical security ranked last on the list of issues, few people had faith in the emergence of renewable energy, natural gas prices were increasing, and a nuclear renaissance seemed inevitable.
This year’s report identified several reliability enhancing trends, including an increase in microgrids and distributed generation, but it also suggested that many utilities have not fully bought into the economics of distributed energy projects. Some survey respondents expressed anxiety about the pace at which wind and solar power are expanding. The trend toward more renewable generation is expected to affect business models and has forced some utilities to invest in transmission and distribution upgrades so they can take on more distributed energy.
“If you were to go back four or five years, the dominance of [renewable energy generation technology] would not have been front and center as we see it today,” said Walsh. “But if you look at the report this year versus what we saw last year and the year before, it seems to be on what we might describe as a normal migration period towards that generation shift.”
Cybersecurity has ranked fourth on the list of issues the past two years, and although it ranked second this year, it was in a virtual tie with environmental regulation and aging infrastructure. Still, the ranking seems to indicate that people are more cognizant of cyberthreats.
“We see the security landscape changing very quickly,” Walsh said. “Government deadlines are coming. In anticipation of the security audits, people want to be prepared, and they’re doing the homework—doing the investigations—so their systems can be well-represented in those audit reviews.”
Coal Is Down, but Not Out
2016 has been a tough year for the coal power industry. Railroad shipments are down 30% or more from 2015, and several coal producers have announced bankruptcies. In fact, for the first time ever in the U.S., annual generation from natural gas is expected to surpass generation produced with coal.
Of survey respondents who work for organizations having coal-fired generation, less than one-third said there were “no changes planned” for their company’s coal-fired fleets; more than two-thirds said their company was planning to retire, repower or repurpose, or divest or sell coal-fired generation in coming years. This is somewhat surprising because many older, less-efficient coal-fired plants have already been retired as a result of more stringent emissions requirements.
Yet, while distributed generation, microgrids, and renewable energy seem to get most of the publicity, traditional generation assets are still vital to the North American power grid.
“The theme that sometimes gets missed is that all of these owners have a need for a diversified portfolio,” Walsh said. “Is hydroelectric part of it? Is nuclear part of it? Is coal part of it? Is gas fired–generation part of it? And the answer is, to varying degrees, yes they are.”
The wild card, however, is energy storage.
“If we could just wave a magic wand and say we’ve got large-scale energy storage that has a discharge rate of seven, eight, nine hours, in my view, that’s a potential game changer,” said Walsh. “But I don’t think anybody sees it this year, next year, or even the year after.”
—Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)