JUST CAN'T GET ENOUGH
This Energy Industry Update examines the state of the utility and energy industry broadly and those areas where we “just can’t get enough” or would certainly like more—such as adequate energy resources to serve load during each hour of the year, or coordination of processes, approaches, and assumptions for planning, or enough financial returns in a rising cost environment. Utility and energy companies continue to pursue investment to “get enough” resources and growth in their business, in the face of macro headwinds and tailwinds.
HIGHLIGHTS FROM THIS
ENERGY INDUSTRY UPDATE
Can’t Get Enough Resources
- Recent grid stresses have spurred the electric industry to reconsider its approach to resource adequacy. Regulators, reliability coordinators, and system planners increasingly believe traditional measures of resource adequacy—availability at peak—are insufficient as more energy-limited resources come online. The industry is exploring alternative approaches, as some regions look at resource-pooling arrangements to lower resource adequacy costs.
- Winter Storm Elliott surprised many utilities during late December, with an unpredicted surge in power demand and non-performance by generating units in several regions. For a few days, grid reliability was pushed to the edge, and some utilities had to institute rotating outages. Months later, post-mortems of the event continue in the hope of learning lessons for the future.
Can’t Get Enough Coordination
- As utility systems (electric generation, transmission, and distribution, as well as natural gas) become more complex and system elements involve more trade-offs and interrelationships, planning approaches, processes, and organizations must adapt to ensure goals are aligned across the utility and with regulatory policy.
- ScottMadden sponsored a Smart Electric Power Alliance fact-finding mission to Australia. Ambitions for rapid change in Australia’s electric sector should send a clear message to U.S. utilities: the energy transition will be both top-down and bottom-up. Utilities must be active participants by offering balanced solutions that account for reliability and affordability.
Can’t Get Enough Growth
- Utility investment continues apace, as opportunities presented by energy transition policy and enhanced by 2022’s Inflation Reduction Act present themselves. We look at what utilities and industry observers have to say about their prospects, as these investment opportunities are weighed against macro and industry risks.
- Local gas distribution companies (LDCs) faced some hurdles in 2022 and into 2023, as higher gas commodity prices reduced bill headroom for needed capital spending. LDCs continue to focus on affordability as they modernize their systems and reduce leaks for both emissions and safety reasons. As some regulators are studying the future of natural gas, LDCs are studying long-term alternatives (renewable natural gas, hydrogen, non-pipes alternatives) to meet a lower-carbon regime.