Utilities may need to rethink their company structure to achieve climate goals, Xcel executive says

Dive Brief:

Electric utilities may have to rethink their company structure in order to achieve ambitious climate goals, according to panelists who spoke last week at the RE+ conference in Anaheim, California.
Growing quantities of distributed generation resources require closer coordination between utilities’ generation and transmission planning teams, while coming trends such as electrification and hydrogen will bring gas and electric utilities closer together, according to Alice Jackson, senior vice president of system strategy and chief planning officer at Xcel Energy.
Utilities also need to reconsider how they go about setting standards and protocols — efforts typically informed by historical data — in order to integrate the technologies of the future, Jackson said.

Dive Insight:

Transmission authorities aren’t the only parties that need to update their planning methods to achieve a modern, carbon free grid. Utilities, also, need to look at their processes if they want to achieve their emissions targets, according to RE+ panelists asked to share ideas on climate innovation.

Jackson said Xcel Energy has begun the process of merging siloed planning staff from across the company after realizing they needed to integrate aspects of their distribution, generation and gas divisions in order to achieve the company’s climate ambitions.

“Historically ... generation planning would come first. Transmission would come after. You locate generation, and then the extension to bring it to the city,” Jackson said. “We realize three years ago that wasn’t going to work anymore.”

To work with distributed resources like wind and solar requires a reversal of the traditional timelines — transmission planning must come first, Jackson said. And other trends have the potential to significantly impact the utility’s approach to planning. Electrification, she said, will require both greater support infrastructure on the electric side, but also careful cost management by gas utilities.

“And the kicker — if we are serious about hydrogen, hydrogen is an electric intensive process, and that means the gas system has got to get even closer in order to create that hydrogen and utilize it,” Jackson said.

Xcel has also begun to reconsider how it sets standards internally, a process that has typically involved looking back on previous projects to inform future buildouts, Jackson said.

“With the system of 2050 looking very different” than today, she said, “you can’t look backwards.”

The climate crisis has also prompted changes in the way utilities and developers work together. Kelly Friend, vice president of policy and regulatory affairs at solar developer Nexamp, pointed to a recent pilot with National Grid in which Nexamp will construct some distribution system upgrades themselves as an example of how the developer-utility relationship is changing.

“What we have seen over time is the recognition that the traditional paradigm has to shift in recognition of the climate crisis,” Friend said. “What we decided to do was ... approach utilities and ask if we can take the load off, and what we found was a receptive audience.”