- Email: [email protected]
An Industry in transformation: Many paths to a shared future
The Electricity Journal 29 (2016) 30–31
Contents lists available at ScienceDirect
The Electricity Journal journal homepage: www.elsevier.com/locate/electr
An Industry in transformation: Many paths to a shared future
A dramatic transformation is underway across the global electric power industry, one that presents opportunities and challenges for electric companies throughout the world. This transformation—more evolutionary than revolutionary—is being driven in large part by new technologies, shifts in public policy at both the federal and state levels, and changing customer and market expectations. At the same time, the world is becoming increasingly connected at all levels. For the electric power industry, issues that used to be considered national or regional are becoming much more international and interconnected. While this transformation is global in scope, its pace is inherently local in character. As the world becomes increasingly connected, the international energy landscape becomes increasingly complex. This complexity poses some puzzles for electric companies, but it also offers significant opportunities. The key to transformation is a robust, wide-ranging dialogue among electric companies from around the world. EEI’s International Programs division is a forum for fostering such dialogue, as well as sharing best practices and lessons learned around increasingly global issues such as building a smarter, stronger energy infrastructure; providing clean energy; and creating the energy solutions customers want. The different phases of transformation facing each region, nation, company, and community present an immense learning opportunity for those willing to engage in the dialogue. 1. Drivers, challenges, and opportunities The pace of change will vary by region. In every case, the goals remain the same—to give all electricity customers more flexibility and control over their energy use; to enhance their options; and to continue to provide them with the safe, reliable, affordable, and clean electricity they depend on to power their everyday lives. Every public policy initiative, regulatory action, and business decision made by electricity companies, regulators, and policymakers should be guided by these goals. As electric companies continue their work to meet these goals, they must consider the unique set of challenges and opportunities presented by the drivers of this energy transformation —new technologies, public policy, and changing customer and market expectations. In the case of technology, challenges surround the ability of legacy systems and their operators to integrate new energy sources and behind-the-meter technologies and to leverage the power of http://dx.doi.org/10.1016/j.tej.2016.08.005 1040-6190/ã 2016 Elsevier Inc. All rights reserved.
transformative trends such as big data. Further, the overall pace of growth is accelerating, which itself presents a challenge. The inherent opportunity is the ability to create and deliver evergreater value by capturing the dividends of innovation through agility and flexibility. Beyond technology, the speed of transformation will depend, to a great extent, on whether regulation evolves to accommodate these changes. In an ideal situation, political, policy, and regulatory processes would inform each other at each step, improving outcomes. Outdated regulations and slow-changing regulatory bodies short-circuit this process. Conversely, the industry’s transformation presents an opportunity to start from a clean slate. Under this scenario, institutions are free to experiment and integrate the lessons from the changing energy landscape more readily, which in turn enables the development of better policy. For example, regulatory pilot programs that test new regulatory models on a small scale might serve as a useful and innovative policy tool. Similarly, energy markets must reflect rapid changes in customer demand, not limit the ability of innovative actors to enter them. At the same time, the industry transformation presents an opportunity to develop new tools and techniques that maximize value and flexibility, while minimizing inefficiencies and lost value due to poorly managed complexity. Going forward, electric companies must be in constant and deep communication with the changing contours of the marketplace, including a keen sensitivity to demographic trends such as rapid population growth, urbanization, and the water-energy-food nexus. 2. Looking forward The challenges and opportunities facing electric companies around the world as they grapple with the drivers of change will vary by region in their specifics, but the broad outlines are universal. One thing that remains constant is the fundamental importance of the energy grid to our society and economy every day. Safe, reliable, affordable, and clean energy contributes to job creation, investment, economic growth and diversification, as well as geopolitical stability. Every participant in the economy is a stakeholder in this transformation. As the transformation continues, electric companies and other stakeholders should continue to engage in a robust, wide-ranging dialogue about the challenges and opportunities they face and the lessons they have learned. By doing so, they can unlock the full potential of the future—broadly driving innovation
L.E. Jones / The Electricity Journal 29 (2016) 30–31
31
and change, and continuing to meet the evolving needs and expectations of customers. The key task for the electric power industry going forward is to construct a framework that encourages international electric companies to compare notes and share experiences in order to foster a comparative learning process. The more stakeholders that are involved in this dialogue, the more prepared the industry will be to usher in the future of energy. Note: This article is based on the keynote presentation given by the author at the Energy Networks Association of Australia conference, May 20, 2016, in Adelaide, Australia.
owned electric companies. Prior to joining EEI, Mr. Jones was North America Vice President for Utility Innovation & Infrastructure Resilience at Alstom Grid Inc., where he assisted utilities worldwide with formulating strategies for deploying new technology solutions. While at Alstom, Mr. Jones also served as Vice President, Policy, Regulatory Affairs & Industry Relations, for the international full-service electric generation and transmission firm. The Liberian-born author received his M. Sc. in Electrical Engineering and his Ph.D. in Power Systems Engineering from the Royal Institute of Technology in Stockholm.
Lawrence E. Jones has served since September 2015 as Vice President for International Programs at the Edison Electric Institute, which represents investor-
Available online 19 September 2016
Lawrence E. Jones Edison Electric Institute, Washington, DC, United StatesE-mail address: [email protected] (L. Jones).
Contents lists available at ScienceDirect
The Electricity Journal journal homepage: www.elsevier.com/locate/electr
An Industry in transformation: Many paths to a shared future
A dramatic transformation is underway across the global electric power industry, one that presents opportunities and challenges for electric companies throughout the world. This transformation—more evolutionary than revolutionary—is being driven in large part by new technologies, shifts in public policy at both the federal and state levels, and changing customer and market expectations. At the same time, the world is becoming increasingly connected at all levels. For the electric power industry, issues that used to be considered national or regional are becoming much more international and interconnected. While this transformation is global in scope, its pace is inherently local in character. As the world becomes increasingly connected, the international energy landscape becomes increasingly complex. This complexity poses some puzzles for electric companies, but it also offers significant opportunities. The key to transformation is a robust, wide-ranging dialogue among electric companies from around the world. EEI’s International Programs division is a forum for fostering such dialogue, as well as sharing best practices and lessons learned around increasingly global issues such as building a smarter, stronger energy infrastructure; providing clean energy; and creating the energy solutions customers want. The different phases of transformation facing each region, nation, company, and community present an immense learning opportunity for those willing to engage in the dialogue. 1. Drivers, challenges, and opportunities The pace of change will vary by region. In every case, the goals remain the same—to give all electricity customers more flexibility and control over their energy use; to enhance their options; and to continue to provide them with the safe, reliable, affordable, and clean electricity they depend on to power their everyday lives. Every public policy initiative, regulatory action, and business decision made by electricity companies, regulators, and policymakers should be guided by these goals. As electric companies continue their work to meet these goals, they must consider the unique set of challenges and opportunities presented by the drivers of this energy transformation —new technologies, public policy, and changing customer and market expectations. In the case of technology, challenges surround the ability of legacy systems and their operators to integrate new energy sources and behind-the-meter technologies and to leverage the power of http://dx.doi.org/10.1016/j.tej.2016.08.005 1040-6190/ã 2016 Elsevier Inc. All rights reserved.
transformative trends such as big data. Further, the overall pace of growth is accelerating, which itself presents a challenge. The inherent opportunity is the ability to create and deliver evergreater value by capturing the dividends of innovation through agility and flexibility. Beyond technology, the speed of transformation will depend, to a great extent, on whether regulation evolves to accommodate these changes. In an ideal situation, political, policy, and regulatory processes would inform each other at each step, improving outcomes. Outdated regulations and slow-changing regulatory bodies short-circuit this process. Conversely, the industry’s transformation presents an opportunity to start from a clean slate. Under this scenario, institutions are free to experiment and integrate the lessons from the changing energy landscape more readily, which in turn enables the development of better policy. For example, regulatory pilot programs that test new regulatory models on a small scale might serve as a useful and innovative policy tool. Similarly, energy markets must reflect rapid changes in customer demand, not limit the ability of innovative actors to enter them. At the same time, the industry transformation presents an opportunity to develop new tools and techniques that maximize value and flexibility, while minimizing inefficiencies and lost value due to poorly managed complexity. Going forward, electric companies must be in constant and deep communication with the changing contours of the marketplace, including a keen sensitivity to demographic trends such as rapid population growth, urbanization, and the water-energy-food nexus. 2. Looking forward The challenges and opportunities facing electric companies around the world as they grapple with the drivers of change will vary by region in their specifics, but the broad outlines are universal. One thing that remains constant is the fundamental importance of the energy grid to our society and economy every day. Safe, reliable, affordable, and clean energy contributes to job creation, investment, economic growth and diversification, as well as geopolitical stability. Every participant in the economy is a stakeholder in this transformation. As the transformation continues, electric companies and other stakeholders should continue to engage in a robust, wide-ranging dialogue about the challenges and opportunities they face and the lessons they have learned. By doing so, they can unlock the full potential of the future—broadly driving innovation
L.E. Jones / The Electricity Journal 29 (2016) 30–31
31
and change, and continuing to meet the evolving needs and expectations of customers. The key task for the electric power industry going forward is to construct a framework that encourages international electric companies to compare notes and share experiences in order to foster a comparative learning process. The more stakeholders that are involved in this dialogue, the more prepared the industry will be to usher in the future of energy. Note: This article is based on the keynote presentation given by the author at the Energy Networks Association of Australia conference, May 20, 2016, in Adelaide, Australia.
owned electric companies. Prior to joining EEI, Mr. Jones was North America Vice President for Utility Innovation & Infrastructure Resilience at Alstom Grid Inc., where he assisted utilities worldwide with formulating strategies for deploying new technology solutions. While at Alstom, Mr. Jones also served as Vice President, Policy, Regulatory Affairs & Industry Relations, for the international full-service electric generation and transmission firm. The Liberian-born author received his M. Sc. in Electrical Engineering and his Ph.D. in Power Systems Engineering from the Royal Institute of Technology in Stockholm.
Lawrence E. Jones has served since September 2015 as Vice President for International Programs at the Edison Electric Institute, which represents investor-
Available online 19 September 2016
Lawrence E. Jones Edison Electric Institute, Washington, DC, United StatesE-mail address: [email protected] (L. Jones).