Black & Veatch: Electric Industry Strives to Adapt, Embrace the Concept of “New Energy”
OVERLAND PARK, Kansas, August 21, 2018 /3BL Media/ – Global engineering, procurement and construction company Black & Veatch’s newly released 2018 Strategic Directions: Electric Report explores the progress made by the industry as it addresses a rapidly changing customer base, commercial defection from the grid and a regulatory landscape challenged to support new market realities.
The company’s annual survey of industry leaders found that nearly half of respondents considered the electric industry’s future imperiled without deeper efforts by utilities to adopt their own alternative energy solutions. Nearly four in 10 said the industry will be hurt without updated regulatory models that account for the rise of renewables among both residential and enterprise customers.
Other key findings include:
- 71 percent of utilities see the “utility death spiral” as a real, potential outcome if utilities fail to implement their own alternative energy solutions, or if regulatory models preclude market flexibility.
- Reliability and cybersecurity remain the top two concerns facing the industry today, continuing the trend from the past three years.
- The majority of utilities (66 percent) see utility-scale energy storage as the best option for renewable integration; grid improvements ranked a distant second at 41 percent.
- Improving reliability and hardening remains the main motivator for investment in grid modernization (64 percent), followed by security and network communications (56 percent), improving efficiency (44 percent), and integrating DER (39 percent).
The energy ecosystem is changing as the concept of “new energy” ushers in a global movement dedicated to clean energy technology and innovation. Traditional grid systems and business models are evolving, building pressure on the electric industry to seek new opportunities for revenue in an increasingly competitive market.
“Utilities must be nimble in making changes that align with growing clean-energy mandates. Failing to do so could drive away sizable commercial and power-hungry industrial clients with the financial means to turn to renewables or distributed generation,” said Ed Walsh, President of Black & Veatch’s power business.
“Those defections from the grid inadvertently would make the system more expensive by spreading its fixed costs among fewer customers and adding to the network’s complexity,” Walsh writes in the report. “Making a meaningful difference would require profit-driven utilities and the regulators who monitor them to reinvent their dynamic. Utilities must successfully balance what they’re able to do in a bureaucratic framework with being agile enough to adjust to a changing energy landscape.
“Conversely, regulators must have open minds and a deep awareness of DER trends and the consequences of when utilities are forced to watch from the sidelines as some of their largest customers set new courses,” Walsh says.
Among key findings, the report highlights how reliability and resilience remain cornerstones of the industry, with natural disasters serving as frequent reminders of the nation’s aging infrastructure. Cybersecurity also ranks high among concerns, as utilities shore up vulnerabilities inherent to increasingly connected systems and the Internet of Things.
The report also explores the industry’s push to modernize the grid, the impact of improvements in energy storage, utilities’ work to manage and integrate increased electric vehicle adoption, and new forays into natural gas and combined heat and power as major steps toward resilience.
“This concept of ‘new energy’ is impacting the industry from all angles,” said John Chevrette, President of Black & Veatch’s management consulting business. “There are many challenges ahead, but utilities that can recognize the challenge, and embrace innovation, will be able to deliver the products and services that will define the future of revenue generation in the energy space.”
- Black & Veatch’s report is based on a survey of 343 participants across the utility, municipal, commercial and community sectors.
- The full Black & Veatch report is available for free download at www.bv.com/reports.
About Black & Veatch
Black & Veatch is an employee-owned, global leader in building critical human infrastructure in Energy, Water, Telecommunications and Government Services. Since 1915, we have helped our clients improve the lives of people in over 100 countries through management consulting, engineering, construction, operations and program management. Our revenues in 2017 were US$3.4 billion. Follow us on www.bv.com and in social media.
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