How is the energy industry evolving? Musk’s not yet a game changer but drones are
Kathleen Wolf Davis | Aug 21, 2015
A couple of weeks ago, I had lunch with a friend who asked if I knew of any "state of the industry" overview. I had to tell him that I wasn't aware of a truly comprehensive one --- everyone specializes these days --- but that I had notes from a panel session I had participated in that might serve as a somewhat subjective --- and certainly biased toward my opinion --- version of just that.
I sent him those notes and then decided I should share them with y'all, too. So, let's chat. I'll tell you what I see bubbling to the surface of this industry, and you tell me your thoughts on the matter --- either in the comments section below or on Twitter @IntelUtil.
What execs are saying
This magazine has interviewed a metric ton of executives to date, for insights into tech and for thoughts into what the industry is doing well and what it's not. So is there a consensus on what's going on? Not really. But, there are a few common threads.
First, everyone seems to be super worried about the changing business model. Sometimes, that thought is paired with discussions on the death spiral, what's going on with coal and the exhausting connections of renewables at the distribution end of the system. These days, it's more common to hear executives talk about this new model as a disruption and an opportunity rather than a fear. But that fear is still part of the subtext. It's darn difficult to take a highly regulated, highly cost-heavy industry and pivot it to something "flexible." It's a bit like asking my grandfather to do yoga. As he would say (were he still alive): The spirit may be willing, but the flesh is weak. We may want to change, but we're held back by public utility commissions, hardware and reliability expectations. That's a lot of weak flesh.
And that's, by far, not the only worry. There are big data worries centering around investments, ROI and analytics. And that investment worry crosses over to security and cybersecurity areas, too-namely about whether utilities are investing in the right areas and with the right companies. You can add on top of those a growing field of concern about consumer focus and customer fears on security and privacy (plus a growing demand for mobility and services).
With T&D, there's a question of whether big transmission build outs will die in the face of the microgrids trend and growing questions on just how to use smart meter data wisely. And, overall, there remains that nagging concern about a retiring workforce and recruitment problems --- especially as the industry gets more and more IT-focused.
That area is a huge issue, and the industry will be increasingly competing with retail brands, along with the Googles, Yahoos and Amazons of the world, for the best qualified. What I normally hear for solutions scares me a bit: education, development programs, scholarships. Those are all well and good --- and there will always be a handful of people who see the power industry as an enabler, as a common good. You will get those martyrs. But, the Googles and Yahoos are going to get the rest --- with more money, more freedom and more flexibility.
And I just don't think there are as many martyrs out there as we're counting on --- who will come to a lower paid, more staid, more strict, less "fun" position because they want to do right in the world.
We absolutely need more martyrs. We're absolutely not going to get them. So, we need to look for other solutions to this issue, which leads me to the game changers category.
What are the true game changers in tech
I'm so tired of talking about Elon Musk. Seriously. So tired of it. Yes, he is a rock star in his own right. He brought a lot of attention to storage, to renewables investment, but the rolling cycle of ups and downs with storage always reminds me of the electric car cycle. How many times did we kill that one? And fuel cells. Been around since 1830, and we're still trying to figure that one out.
There are still basic issues with energy storage. We still haven't solved that problem. Shining it up. Marketing it up. Packaging it up doesn't change those fundamentals. There are limitations.
In fact, when this magazine spoke to Noel Schulz, K-State prof, at the beginning of her tenure as president of IEEE PES, I asked her what she would tell her students to focus on. She said, "Continue to work on storage. I tell my students if they can do storage, they can rename the college of engineering here after themselves. Yes, there have been incremental storage solutions, but a bigger, newer solution is needed with all this developing smart grid technology."
Musk hasn't found that miracle solution. He's just really good at PR.
And, yes, PowerWall is fun stuff. It's what I would label "luxury" tech. It appeals to those willing and able to pay for the fun factor. Nest is in the same category. When does it become a game changer? When it falls down a few rungs and impacts all of society. For the purposes of this discussion, I'll put this label on it: when it has an impact, in some way, on an $750-a-month apartment in Oklahoma City, Oklahoma or a $150K house in Detroit, Michigan. Then you've changed the game --- not when a billionaire can afford to string PowerWalls together to weather a minor outage.
But there are game changers in tech in this industry. Remember that workforce problem? That might be mitigated a bit with augmented reality. If you can capture the retiring workforce's knowledge --- in the form of unstructured data --- into a system before they leave and overlay that data on a computer-generated reality system to help new workers, this is a game changer. It can make maintenance and field work easier. You can do some amazing reliability stuff there. EPRI is working on that, Space-Time Insight. It's in the works. It's practical, and it benefits the entire system.
The other tech game changer in this industry: drones.
The value is obvious. It's $1200 or more per mile to check lines via a helicopter. It's a necessity, but it's an expensive one. Even a high-end drone equipped with specialized software can recoup costs in one trip down a line. SDG&E has been on top of this for a while. They applied for the special exemption first, but ComEd beat them to the approval punch. Still, both are now allowed to do so. And this will add up to millions in cost savings. And other utilities are lining up to get in this game, including a recent reveal at Duke this week. It's easy to see why.
In the end, what I see as game changers are disrupters that save cost and improve service within the overall basic work of a utility. They aren't shiny like the Nest. They don't have devoted follower like Elon Musk. They're practical, usually behind the scenes, and solve problems directly and in the moment. And in the moment is where a utility has to live while we dream about that utility of the future that just isn't here yet.
What are your thoughts on the biggest fears and largest industry game changers? Let me know in the comments below or on Twitter.
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