"For more than a century, electric utilities in the US have kept the lights on, powered our economy and created an engineering marvel in the US electric grid. Now, the electric utility industry is changing at a pace never seen before."
– Julia Hamm, CEO, SEPA
As the 2020s are poised to be the transformative decade for utilities in the US, leaders at electric cooperatives and municipal utilities know that delivering upon the promises they've made to their communities will not be easy.
Fortunately, there is no one better prepared to shepherd our cities and towns to a more sustainable, affordable, and inclusive energy future than the local utilities who first brought electricity to our homes and businesses.
Here at Camus, we are proud to support the co-op and muni leaders who are discovering the best ways to manage a changing grid. From their experiences and from ours, we've identified the top nine opportunities for co-op and muni leaders today:
1. Changing Workforce
"My boss has the whole system in his head. I've been here two years -- and I just don't!"
– Engineer, Anonymous Rural Electric Cooperative
By 2027, 50% of utility employees present in 2017 will have retired -- taking with them decades of institutional knowledge for how to operate a reliable grid. Attracting and retaining young, skilled talent also gets more difficult with the departure of experienced leaders, as the exodus of operators leads to burnout among those who remain. Co-ops and munis must identify and invest in tools that lessen reliance on knowledge that resides in the heads of veterans and make it easier for junior employees to do their jobs well and get home to dinner on time.
2. New Investments
Aging assets, the growth of renewables, DER deployments, and climate change are all driving the need for more than $50 billion in new investments across a historically stagnant load base. Justifying new investments requires reducing costs elsewhere to avoid rate hikes while achieving operational goals. Balancing cost-cutting and grid modernization is no easy task -- requiring co-op and muni leaders to gain better visibility of evolving grid conditions to help them decide which investments to prioritize.
3. Growth of Renewables
Low-cost renewables provide an opportunity for co-ops and munis to save millions annually in energy costs. However, intermittency, battery storage development, interconnection delays, and existing power supply agreements all create barriers to wide-scale adoption. Utility leaders must find ways to reliably integrate local renewable generation to tap into cost savings -- likely relying on changes like increased visibility of real-time grid conditions and the incorporation of local flexibility assets into day-to-day power supply coordination.
4. Acceleration of DERs
"Most distributed devices and smart appliances have APIs which enable telemetry and often control, and most vendors are happy to provide access to utilities (for a fee). There is no shortage of data - but almost no utility operational systems incorporate this data today."
– Astrid Atkinson, CEO, Camus Energy
The adoption of a wide variety of distributed devices like rooftop solar and residential batteries is changing the load profile of consumers, creating rate design dilemmas, and proliferating the number of vendors, device types, and software interfaces that grid operators must manage.
To cope, co-op and muni operators will need to flip the script on DERs: unlocking their flexibility as supply resources instead of treating them as unknowable and uncontrollable loads. The main barrier is not necessarily telemetry or control, but instead the lack of integration of DERs into existing grid management approaches alongside conventional utility equipment.
5. Business Model Shifts
As community members adopt distributed generation, traditional "per kWh" tariff design will result in inequitable outcomes by shifting costs to those least able to bear them -- as evidenced in Taos, New Mexico. New tariff designs will be necessary to more fairly allocate fixed costs while enabling community members to adopt and take full advantage of emerging technologies.
To design and implement such tariffs, utilities will need to develop better visibility into behind-the-meter devices, especially generation, and build or acquire tools to simulate the impact of new programs and rates.
6. Evolving Expectations
"Customers increasingly want greater intimacy with their power supply. They want to know where their power is coming from."
– Chris Hansen, VP of Origination, Tennessee Valley Authority
Digital experiences are a part of everyday life. And as consumers ask Siri for real-time weather reports and charge their home batteries via mobile apps, they expect similar capabilities from their utility. As a result, communities are increasingly calling for utilities to provide real-time visibility into grid costs, conditions, and carbon emissions and to change power supply agreements (such as between co-ops and G&Ts) to support greater distributed generation.
These calls will only increase -- and utility leaders looking to keep their communities happy will need to offer greater transparency and participation options.
7. Community Economics
Now more than ever, communities are attuned to how local utilities can create avenues for economic development while providing electric service -- such as by sourcing power supply investments within the community and using low rates, clean energy, and reliable service to attract new businesses.
Looking forward, co-op and muni leaders will be expected to leverage the energy transition for even greater economic development benefits as low-cost renewables and beneficial electrification enable rate savings and new investments.
8. Rise of Resilience
As wildfires, landslides, flooding, heat waves, deep freezes, and other natural disasters increase in frequency, co-op and muni leaders must improve local grid resilience. Community members, while patient and appreciative, will hold increasingly high expectations for rapid recovery from disasters as they occur more often.
Growth in distributed generation and demand-side flexibility provides an opportunity to improve resilience by tapping customer resources. But doing so requires utilities to invest in improved situational awareness and control.
9. Cybersecurity Risks
Cyberattacks are a growing threat for utilities, both in terms of direct attacks and disruptions to power supply. As utilities integrate more distributed devices, potential avenues for cyberattacks will increase, and bad actors may seek to utilize poorly-protected DERs in coordinated attacks or break into utility control systems via gaps in protection.
Utilities must adapt to these new threats while moving ahead with the transition to a more decentralized grid. This requires a shift from old-school, hard-crust security approaches to modern methods like zero-trust -- following in the footsteps of leaders in IT, healthcare, and financial service industries.
Putting it all together: What can co-op and muni leaders do today?
It's getting tougher to manage the grid effectively, but each challenge presents an opportunity for the emergence of stronger electric cooperatives and municipal utilities. Fellow utility leaders have already begun this journey. They are witnessing their communities grow and prosper from the transition to a more distributed, low-cost, and sustainable energy future.
For established and emerging co-op and muni leaders, the experiences of those who've started down the path offer valuable lessons that you can take home to your community. Download our free Co-op & Muni Leaders' Guide to Managing a Changing Grid to learn more.
Download the full infographic here.
