King for a Day
Executive Summary
The energy utility industry faces several substantial challenges, all of which require major investment, time to remedy, and a favorable regulatory and business environment. Indeed, all of these challenges might be easily resolved if one were “king for a day.” Such a king could order new infrastructure to be constructed to satisfy emerging large loads…or hire the next generation of skilled workers…or fix our gas and power infrastructure and processes to ensure grid reliability, particularly during major weather disturbances.
However, since the United States is not a monarchy, we must use our current regulatory and market processes to advance these objectives and ensure North American energy infrastructure is adequately reliable, affordable, and clean. Navigating these processes will require patience and persistence to achieve outcomes that satisfy stakeholders or (more realistically) dissatisfy all constituencies the least.
HIGHLIGHTS FROM THIS
ENERGY INDUSTRY UPDATE
Utility Themes
- Increasing demand, a changing resource mix, and needed grid investment are driving significant utility capex. Those capex needs and growing costs are driving utility capital needs and increased revenue requirements.
- Utilities are navigating rate cases and the capital markets to ensure adequate financial resources to fund this growing spending.
Winter Storm Performance
- In December 2022, Winter Storm Elliott affected the power and gas systems in the eastern United States. Some utilities had to implement rolling blackouts to preserve grid stability. A year later, a report on Elliott verified that many ongoing recommendations for improved cold weather operations remain to be implemented.
- Regulators and grid operators are refocusing efforts to deal with these storms. The question is will it be enough and in time?
Large Loads
- Electricity peak demand and energy growth rates in North America are increasing at a pace not seen in decades. A common driver behind the dramatic increase is the rapid expansion of new and planned manufacturing facilities, data centers, and cryptocurrency mining.
- The rapid growth of large loads is prompting stakeholders to respond with a variety of actions. This includes grid operators and electric utilities signaling an urgent need for new generation capacity in larger quantities and on faster timelines than originally anticipated.
Gas Sector Developments
- Regulators and natural gas utilities in jurisdictions that have ambitious decarbonization objectives continue to consider effective and affordable ways to reduce emissions such as “clean heat.” Several jurisdictions have instituted “future of gas” proceedings that may change “business as usual” practices and operating models.
- Meanwhile, other jurisdictions have pushed back on local efforts to constrain customer choice by limiting natural gas as an energy source for retail customers.
Workforce Development
- The Center for Energy Workforce Development’s biannual Energy Workforce study provides insights on specific challenges facing the energy sector. The results show an energy industry facing a new set of workforce challenges. Concerns about an aging workforce have been replaced with a need to enhance the skills of a younger workforce.
- Addressing these challenges will require an integrated workforce planning and development framework. Implementing an integrated approach can provide a strong foundation and support a robust collection of talent strategies.