MEP CA AB 1103

The Future of Utilities

A massive upheaval is on the horizon for the energy industry. With the prices of alternative energy sources dropping and legislative bodies enacting more clean energy policies this paradigm shift becomes increasingly imminent. Industry leaders are hard at work trying to anticipate these changes and pave the way for the utility of the future. Although everyone will be affected, no one knows exactly what our cities' utility infrastructure will look like after this shift occurs. Fortunately research is being conducted that may give us a glimpse into what factors will determine the ultimate outcome and where our focus needs to be concentrated to make the transition as seamless as possible.

In 2015 a survey of over 400 U.S. electric utility executives conducted by Utility Dive gave us our clearest glimpse yet into what the coming decades will entail for our utility services. The first point made by executives was a nearly unanimous message with 97% of respondents reporting that their utility's business model needs to change. This will not, however, be a unanimously welcomed change as internal resistance against footing the bill to enact new technologies is inevitable. The need is there, but the incentive is still in the financial negative for utility providers, as they will be absorbing the cost.

One of the main technologies in question predicted to increase the reliability and efficiency of our utility framework is the proposed conversion to microgrids. A microgrid is a localized energy grid that can operate supplementary to or autonomously from the main grid. This system has more flexibility than the current norm. Microgrids can be powered by distributed generators, batteries, and renewable energy sources. This provides communities with energy independence from the main grid, and sometimes makes them more environmentally friendly.

As it currently stands we have massive, localized grids serving vast swaths of our cities and suburbs. This is problematic for many reasons, but the two primary ones are inefficiency and vulnerability. A central grid is inefficient due to the greater distance of transport. During transit, electricity is lost. The greater the distance it has to travel from where it is generated the more energy lost. Microgrids would cut back on these losses by providing sources of electricity closer to where it will be utilized, allowing us to cut back on this natural transport deficit. A central grid is also more vulnerable to damage and loss of service. Even standard maintenance can result in power outages for large numbers of customers. When these sites go down, the area where service is lost is massive and there are few alternative sources of energy. With microgrids there would be fewer people affected by any loss of energy in the case of a natural disaster or other disruption. These and a few other factors lead many industry leaders to claim that microgrids are the way of the future.

One unexpectedly impactful influence to the stability of utility business models is the growing prevalence of electric vehicles. Rates are currently based on defined peaks of energy intensity. Depending on when during the day you are using electricity you will be charged at variable rates. The introduction of growing fleets of electric vehicles that will be charging at irregular times throughout the day will throw the on-peak/off-peak system off kilter. This means utility providers will need to reevaluate how they define their peak hours and how they charge customers. According to James Avery, Senior Vice President of Power Supply, San Diego Gas & Electric, if every car switched to electric this transition would double the load on the electric grid. This poses a major threat to the current business model of utility companies if the trend toward electric cars continues.

Utility Dive's 2015 survey emphasizes many of the concerns above. When asked to choose "three technologies you think your utility should invest more in?" industry leaders sounded off with the following top choices:

  • - 65% Energy Storage
  • - 52% Distribution generation
  • - 47% Utility-scale renewables (solar & wind)
  • - 35% Demand-side management
  • - 34% Electric Vehicle infrastructure
  • - 34% Microgrids

While concerns and apprehension are unanimous, leaders say that the industry is missing a united vision. The obstacles are evident, but the methods and route are fraught with debate. Whatever the case it is clear that the central grid is going to need to be bolstered by distributed generation, renewables, and energy efficiency to keep pace with intensifying legislature and the swelling demands of customers.

For more information on utilities as they relate to city and state legislation such as CA AB 802, in addition to commercial building energy conservation programs such as ENERGY STAR, utility benchmarking, utility automation, utility optimization, energy audits, LEED, and mechanical-electrical-plumbing "MEP" energy efficiency design projects, please visit our website at and follow us on Twitter @MEP_LLC.