Ahead of speaking at Energy Networks 2016, Edison Electric Institute vice president international programs Lawrence E. Jones talked with ES&D about flexibility, holistic policy and the need for robust, cross-continental dialogue.
Can you give us a preview of what you’re going to be talking about at Energy Networks 2016?
I will be focusing on the dramatic transformation facing the electric utility industry around the world, and exploring the opportunities and challenges facing electric companies. Specifically, I will focus on three main points. The first point is the industry’s transformation is rich with opportunities, though this is not to say there aren’t challenges. Second, I will be speaking about the economic dimension of the changing industry, a focus that is often overlooked.
The economic forces at work have three core drivers that are closely interrelated; evolving regulatory regimes, new business models, and a changing customer experience. Finally, I will also be speaking about how the changes in the international energy industry are occurring at every step in the value chain – from generation to the customer in their home – and how we, therefore, need to view this grand energy transition in a holistic way.
The Australian energy sector knows its in a period of unprecedented upheaval. It knows renewables need to be integrated into the grid, and it knows the top-down model networks have been working in for the last century has been turned upside down. So, where should the energy conversation be steered towards now?
Things are changing quickly, but as you said, there is a pretty clear consensus around where we need to go next to secure a reliable, safe, affordable and clean energy future. So it’s not so much the energy conversation has to go in a new direction, but rather it needs to get broader.
The world is becoming increasingly connected at all levels. For the energy industry, this means issues that used to be national or regional in scope are becoming much more international and interconnected.
Trends in policy, technology, consumer choice and security can affect markets and policies around the globe. So, the key to moving forward is to have a robust, wide-ranging dialogue among electric companies from around the world about the kinds of issues they are facing.
My vision for EEI’s International Programs division is for it to act as a conduit for this sort of international dialogue, and as a forum for sharing best practices, lessons learned around important and increasingly international issues such as: cybersecurity; building a smarter, stronger grid; transportation electrification; and integrating renewables.
Regulatory frameworks are going to need to become more and more innovative. Does this involve becoming more flexible?
Technologies affecting the grid are changing fast, and there is a danger of policy getting left behind. In this regard, regulatory flexibility is key; markets will have to be able to integrate new technologies while maintaining affordability, reliability and resilience. There is significant opportunity here in terms of taking a pilot program approach to making and refining policy. Such programs would test new rule-making ideas on a smaller scale before rolling them out to an entire service territory. This is another area where international dialogue is key; an ongoing conversation across international borders allows companies all around the world to take a more comparative approach to regulation design and implementation.
In terms of maintaining flexibility, I think there are three main areas where regulators of the future will need to pay special attention.
1. First, policymakers will need to be in touch with the demographic shifts occurring in their regions. Overall population obviously plays a role in demand, but so do factors like average age, urbanisation and others. With many countries facing significant demographic shifts in these regards, this will become increasingly salient.
2. Regulators and policymakers will also need to stay up to date on the convergence of digital and energy technologies such as smart meters and other smart grid technologies. This could be a huge opportunity in terms of maintaining reliability and resilience, but is complex and will require careful management.
3. Finally, we all need to remain aware of the importance of ensuring the power grid, and access to it, is fair and equitable. Universal access to affordable and reliable electricity is a rising tide that lifts all boats – it makes our communities and economies stronger.
How do we plan for the future network when the industry is changing so rapidly?
The industry is changing rapidly in terms of regulation, technology and customer preferences. That said, it’s pretty clear where things are headed in most of these respects. Renewable energy will continue to be a focus, and will be increasingly enabled by storage and sophisticated asset management systems. The industry will need to invest in grid modernisation and smart grid technology to maintain its reliability and resilience.
Finally, the industry will continue to find innovative customer-focused solutions that enable increased choice and control when it comes to the way people use their energy.
So, it’s less a matter of navigation than one of management?
Yes. We know where we’re going, it’s just a matter of getting there in a way that is efficient, responsible and provides the most benefit to customers. The way we do that is through deep, broad and ongoing conversation, across borders and even across industries. It is important we learn from each other and grow as this transition takes place.
Let’s talk about storage. What role do utilities and network providers need to play in the uptake of battery storage and utility-scale storage?
The grid is agnostic to the technology attached to it, and it should remain this way. New technologies should integrate seamlessly and instantly with the grid, acting as ‘plug and play’ components. It’s the job of energy companies to make sure technologies like storage can be dropped into the grid at the customer level and function normally. Regarding grid-scale storage, obviously energy companies have a large role there.
Many companies have already begun to invest heavily in this area, and the speed, volume and breadth of this investment will only grow as the economic case for grid-scale storage continues to improve.
Ultimately, large-scale storage will be indispensable as electric companies continue to meet customer demand for clean energy, as well as for auxiliary grid services. Electric companies and their tech-sector partners are leading the way in developing this capacity.
Does industry need to encourage consumers to stay connected to the grid?
It’s not so much a matter of convincing as it is one of education. Actually disconnecting from the grid in any meaningful sense is impractical for most people. The grid provides critical customer solutions and services that these types of home systems cannot. Additionally, it provides reliability, responsiveness, and an amount of sheer amperage that solar and batteries cannot really compete with on their own.
That said, the rooftop solar and storage space can be an area of immense opportunity for electric companies in terms of meeting customer demand and diversifying the grid, but the relevant policies must be fair and equitable for it to work. Many companies are already offering innovative customer solutions along these lines.
What energy storage lessons can Australia learn from the US?
This gets back to what I said earlier about the importance of a robust international energy dialogue. We are all figuring this out as we go, and being able to learn from the experiences in other countries, whether it’s the US, Australia or elsewhere, will be critically important.
Consider Germany’s experience with its ‘energiewende’ clean energy transformation program. We need to be able to understand how the German experience translates, or doesn’t, across international contexts.
What are the factors that are constant between Germany and Australia, or the US? What are the differences? What are the implications for energy policy? We must have a framework that encourages international energy companies to compare notes and share experiences in order to be able to develop this sort of comparative learning process.
What are you most looking forward to about Energy Networks 2016?
I’m most looking forward to engaging in the sort of open and robust dialogue I mentioned earlier. The increasingly globalised changes to the industry require global responses, and my hope is to build and foster international discussion. Such a forum allows us to learn from each other – not just about how to cope with the transition facing our industry, but how to thrive in it.
Originally from Liberia, Lawrence earned his PhD in Electrical Engineering from the Royal Institute of Technology in Stockholm, Sweden. Prior to joining the Edison Electric Institute, he worked with Alstom and as an energy consultant. Last year, he joined the Edison Electric Institute in Washington, DC as vice president of international programs.
Lawrence will be presenting the keynote address on energy in transition at Energy Networks 2016.