The rapid evolution of the world’s power generation landscape is creating challenges for utilities and others in the energy space, as power plant owners and operators adapt to new technologies and changing business models.
Jan Vrins, managing director and segment leader for Navigant’s global Energy practice, is immersed in this change. Vrins, who joined Navigant in 2014, has extensive energy management consulting experience, and advises executives “on developing strategies and sustainable practices to increase shareholder value.” These strategies include operations, product development, organizational structuring and restructuring, and technology strategy and implementation, among others.
Navigant’s global Energy practice not only works with energy companies but also government agencies, businesses, technology companies, and investors. Vrins and his team have expertise in several areas, including climate strategies, energy policy and implementation, sustainability, market structures and pricing, energy efficiency and demand-side management, emerging technologies, renewables, urban energy and distributed energy resources, transmission, and grid modernization.
Navigant has developed a framework, The Energy Cloud, which looks at climate change, opportunities in the energy market, regulatory and policy issues, and strategies and business models for energy companies. Navigant also this year, for a fourth straight year, collaborated with Public Utilities Fortnightly on a report—”State and Future of Power”—to identify key changes in the electric utility industry and provide guidance to energy organizations.
Said Vrins of that report: “Whether from disruptive forces or changing business models, utilities face complex challenges, but also unprecedented opportunities for growth. Investing in sustainable energy infrastructure and solutions, taking a customer-centric approach, and developing innovative business and regulatory models are all critical paths to staying relevant to shareholders and customers in tomorrow’s energy industry.”
Vrins sat down with POWER in mid-June at the Edison Electric Institute’s annual convention in Philadelphia to discuss the future of global power generation and the state of the power industry.
POWER: You’ve been with Navigant five years. What are the major transformations you’ve noted, and what does the future hold?
Vrins: It’s been a fast pace, and from my perspective, it’s going to go faster. We’ll see more change in the next five years than we’ve seen in the past five. I think that’s the message for utilities. Through renewables, through electrification of transportation, the opportunity for utilities going forward, the opportunity is much greater than what we’ve seen in the past.
POWER: What about new business models for utilities? You advise companies on new opportunities; what does the future hold?
Vrins: I’ll tell you, 15 years from now, we won’t recognize the companies we see now. They will be doing so much more than just delivering electricity to their customers. Our future is brighter. This is not a death spiral, this is a huge opportunity to drive value for shareholders.
POWER: What about the impact from closing coal plants, and other power plants, with lost jobs? How can utilities and communities work through that?
Vrins: There is local impact when you shut a facility, but if you look big picture, there’s a much greater opportunity there, with products and services, to create a lot more value for communities, to create smart cities.
POWER: How does a company move from its old business model to this new business model? How fast can they move, and how can they prevent revenue erosion?
Vrins: As an industry, we have to take the leadership role here. We should not be afraid of exploring new business models. We should not be following our customers, and the cities that we serve, we should be ahead of those customers when it comes to the role of energy and electricity in the future. Understanding what customers want … I want to be one step ahead.
POWER: What about the impact of electric vehicles (EVs)? There is a lot of talk about EVs and their impact on the power grid.
Vrins: EVs are not going to be the savior of load growth. The electrification of transportation will not make up for the loss of load.
POWER: The changing energy landscape has also brought changes in the boardroom, and you talk to executives on a regular basis. How do you see leadership roles evolving?
Vrins: This industry had the worst diversity ever. Now that has changed. Now we see a lot of diversity among energy executives, and the transformation is continuing. I think we’ll see more female CEOs, a lot more.
POWER: I’ve heard power plant managers talk about the challenge of recruiting younger workers, particularly those with technology and digital backgrounds. I’ve heard the message “they all want to work for Google and Amazon.” What do you say about that?
Vrins: I think our industry is cooler. We have AI [artificial intelligence], blockchain, our industry is more interesting because we have to build the bridge to the future, and we have to build it now. We are at the leading edge of technology. We have to figure out new solutions, and figure out what we are going to do with these older assets.
We still have the physical assets, and they might change, from a large coal plant to a renewable installation, but we’re still engineers, and we still need engineers, and we need those people who can develop and work with new technologies. As for concerns about the aging workforce, I don’t see that or hear that, I don’t hear it at the executive level anymore.
POWER: What are your top five concerns for the industry moving forward?
Vrins: Changing regulatory models.We all want certainty with regard to regulation. The tone in our industry has been set by the investor-owned utilities. They have had stronger relationships in D.C.
Stranded assets—what do we do with plants we don’t need anymore?
How do we innovate, how do we manage governance and process?
Climate and sustainability. I hear this a lot from large corporations. We do a lot of work with large corporations. We helped McDonald’s with their science-based targets. We helped Coca-Cola with their science-based targets. These guys are looking at changing their entire systems, their entire supply chains, to be decarbonized. And it’s now going down from the Tier 1 to the Tier 2 companies.
And changing customer needs. [Utilities] have to be out front in knowing what their customers want.
POWER: Do you see a particular generation technology emerging, something most people may not be thinking about?
Vrins: Waste to energy, biomethane. We’re not going to get there [to climate targets) with 100% battery storage. For that last 20%, or 30%, or 40%, we will need a fuel. We actually believe that gas is a big part of a low-emissions energy system. There is a way to move to renewable gas as fuel. And as a pathway to decarbonize completely. But getting rid of gas assets would be a mistake. At some point you will need those.
POWER: Is there a path forward for traditional generation sources, such as coal and nuclear power, and natural gas?
Vrins: For coal, no. There is a role for natural gas, with carbon capture. For nuclear power, we need it now for the transition to cleaner energy. But long term, no, we can’t make the economics work. A country like France will hold onto nuclear as long as they can, for the transition [to clean power]. China has figured out how to build it economically, but it’s so hard to make the economics work in the U.S.
There’s potential for geothermal, in Europe, you can look at the Netherlands, my home country. A lot of these countries have dinosaur fuels they want to get rid of, so they’re looking at where are the thermal resources, and can they link them to the grid.
Offshore wind is also going to grow. It already is big in Europe. There’s already more than 180 GW of installed capacity, there are dozens of sites in the North Sea. The challenge is how do you bring the generation ashore.
And there’s hydrogen power, hydrogen networks are being developed [Editor’s note: GE recently talked about hydrogen in a POWER interview]. If you take offshore wind generation, and create hydrogen networks, that’s a better solution than building transmission lines to the center part of Germany.
POWER: You’ve said distributed generation is the future of the industry, with distributed energy resources (DERs) and their integration shaping the grid. Why is that?
Vrins: In this energy cloud world, DERs are coming onto the grid 8 to 10 times faster than central station generation. And in the next [decade], new central generation will be 8 to 10 times less than DERs. It will be dependent on what the last corporates are going to do, the cities … they’re going to drive this.
In this world, local [generation] becomes more important. You have local distributed energy resources. In this world, the smaller utilities, the co-ops, the munis [municipalities], will take a lead role in how to do this well. The co-ops and munis could be a lot more innovative than the investor-owned utilities.
I still believe in economies of scale, and it will include a lot of distributed resources. One mistake we could see, [utilities] with stranded assets, not integrating DERs, that’s a societal mistake.
—Darrell Proctor is a POWER associate editor (@DarrellProctor1, @POWERmagazine).
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