Hometown Connections Industry Trends and Issues March 7, 2018 · 2017 Strategic Directions: U.S....
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Hometown Connections Industry Trends and Issues March 7, 2018
Transcript of Hometown Connections Industry Trends and Issues March 7, 2018 · 2017 Strategic Directions: U.S....
Hometown Connections Industry Trends and Issues
March 7, 2018
Quick Example of a Really Bad Trend
Short Cut Offs Tube Socks
6/15/14 Confidential 2
Example of a Great Trend
Patty Cruz has joined our team!
6/15/14 Confidential 3
Public Power Has Entered a Time of Great Change
Factors driving this change:
• Shifting regulatory environment • Changing power supply • Aging infrastructure • New technologies • Evolving customer preferences • Workforce/policy maker issues • Increasing financial pressures
The electric power industry in the United States supports more than 7 million jobs — or one in 20 American jobs — and contributes 5 percent of total gross domestic product, or GDP, says a report released Aug. 2 by M.J. Bradley & Associates.��The MJB&A report, Powering America: The Economic and Workforce Contributions of the U.S. Electric Power Industry, was written for the Edison Electric Institute, the American Public Power Association, and the National Rural Electric Cooperative Association. It offers a detailed analysis of the role that electric companies play in the nation’s labor force and economy.��The study found that the electric power industry directly provides nearly 2.7 million jobs nationwide through its employees, contractors and supply chain, and investments. More than 4.4 million additional jobs are supported through the induced effects of these jobs, the report says. ��Among the study’s findings:�⦁ Employment – About 5 percent, or 1 in every 20 jobs in America, depends on the electric power industry. Each job directly provided by the industry “supports an additional 1.7 jobs in our communities.”� �⦁ Job quality – The average job in the electric power industry pays twice the national median wage. In 2015, the median annual wage in the industry was $73,000. � �⦁ Infrastructure investment –The significant annual investments by the electric power industry to build smarter energy infrastructure and to continue the transition to cleaner electric generation sources are expected to exceed $100 billion annually for the next several years. This level of investment provides more than 1.4 million jobs, the report estimated. ��“The electric power industry is one of the great American success stories and provides high-quality jobs that empower our nation’s economic growth,” said MJB&A President Michael J. Bradley, in an Aug. 2 news release describing the study. “Behind every wall outlet or light switch, there is a dedicated workforce focused on powering the lives of millions of Americans who rely on electricity for nearly everything they do.” ��Electricity: ‘the first 5%’ of the US economy��The 5 percent of GDP that flows from the electricity industry “is the first 5 percent of the American economy,” said Paul Allen, senior vice president of MJB&A, during an Aug. 2 conference call with reporters. “Other industries depend on the men and women of the electricity industry because they depend on electricity,” he explained.��Agreeing that the electricity industry is the “5 percent of the American economy that supports the rest,” APPA President and CEO Sue Kelly noted during the conference call that public power utilities “are the backbone of our communities.”��Kelly noted that although there are large public power utilities, the median public power utility serves 4,000 customers, so “we are very prevalent in small-town America.”�
1. Increasing Regulations National
– Environmental regulations in flux • President Trump appointees moved to review or rescind
60 environmental regulations and more than 30 at the EPA
• Rewrite of Clean Power Plan underway – Grid Resiliency a big topic
• Distributed Energy Resources • Storage now a part of many IRPs
– Grid Security (Cyber & Physical) is the new norm – Tax exempt financing will always be under
microscope
Comments from Sierra Club and other environmental groups that gas is a bridge fuel at best and there is no place for fossil fuel generation in our future. Coal, oil and natural gas are literally poisoning us. Robin Mann – President.
The Cybersecurity Buzz
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http://www.reuters.com/article/us-ukraine-crisis-cyber-attacks-idUSKBN1491ZF
http://www.reuters.com/article/us-ukraine-cyber-attack-energy-idUSKBN1521BA
Sept 17 Fortune Mag – Cyber crime costs the global economy $450 - $600B/year.
- 7 -
How are the Breach's Occurring?
2. Aging Infrastructure • Much of nation’s transmission and distribution
infrastructure installed in the 50s and 60s– and reaching end of life around the same time
• Older equipment and design cannot accommodate modern grid technologies – Few distribution systems optimized for growing
reliance on distributed energy resources • There is a big push for “system hardening” on
both transmission and distribution systems
Do you know the overall health of your asset? Using metrics? Are you feeding the Golden Goose? Too often general fund transfers causing too high of draw downs in cash reserves and system renewal suffers. MA state law.
Aging Infrastructure - Water
AWWA: “The Replacement Era” • Restoring existing water systems as they reach
the end of their useful lives and expanding them to serve a growing population will cost the nation at least $1 trillion over the next 25 years, if we are to maintain current levels of water service.
Source: AWWA Report: Buried No Longer: Confronting America’s Water Infrastructure Challenge, 2011
2017 Survey of 600 U.S./Canada Electric Utility Executives Rate the following issues according to immediate importance to your company
“2017 State of the Electric Utility”: Utility Dive in association with PA Consulting
Top 3 are age related. Aging infrastructure, aging workforce, aging regulatory model.
2017 Strategic Directions: U.S. Electric Industry Report, Black & Veatch Insights Group
2017 Survey of 533 U.S. Electric Industry Participants
Rate the importance of each of the following issues to the electric industry using a 5-point scale.
3. New Technologies
Biggest change in our industry in it’s history. Customer, not regulatory driven. If you don’t provide others will. Customer automation and Distribution automation - Voltage Control adjusting voltage by 5 volts can save 2 – 3% in costs via wattage reduction. Distributed generation providers everywhere now. Solar City and others. Per recent Navigant report, forecasting nearly 3 million EV cars by 2023. End of 2014 = 700K.
Traditional Utility Business Model is Changing
• Centralized to decentralized • High “demand” growth is in the past • Distributed Energy Resources
– Solar – Electric Vehicles
• Energy storage – PowerSecure – Tesla/Panasonic/Solar City
Generation decentralized up until the 50s & 60s. Then centralized generation was built. Now appears to be heading back to more decentralized. In today’s public power NY PSC issues staff report calling for a shift towards more distributed generation resources with greater consumer participation. Solar – recent 1 mW community solar farm in IN at little over 6 cents/kwh. In March Tesla (CEO - Elon Musk) announced a partnership with Panasonic to build a $3 billion gigafactory in Nevada by 2020 which will produce 30 gigawatt hours worth of batteries/year. This is more lithium-ion batteries in one year than the whole world produced in 2012. And they have been running trials with SolarCity for storage. Elon is Board Chair and largest stock holder in Solar City. California end use customer: ~14MW AC Solar, 3.2MW AC Fuel Cell (up to 4MW total future), 6MW Generator (up to 9MW total future), 6MW of Battery. Batteries and fuel cell work concurrently, so the total output AC for them combined is 9.2MW continuous, 12.0MW sustained for 90 seconds, and 15.2MW maximum peak for 30 seconds. Load is estimated at 21MW, but no one knows for sure.
Per capita residential electricity sales in the U.S. have fallen since 2010
Source: U.S. Energy Information Administration, ”Today in Energy” July 26, 2017
Energy efficiency is working.
State and Future of Power Industry – July ‘17 Public Utilities Fortnightly
Which one of the following trends is the most disruptive to traditional utility business models over the next decade? (Online Survey of 407 Leading Thinkers from Utilities)
Bloomberg New Energy Finance Predicts EV Sales Tops ICE by 2040
Electric Vehicle Outlook 2017, Bloomberg New Energy Finance
Report analyzes five underlying factors that is expected to drive increased EV adoption over the coming years: • Short-term regulatory support in key markets
like the U.S., Europe and China • Falling lithium-ion battery prices • Increased EV commitments from automakers • Growing consumer acceptance, driven by
competitively priced EVs across all vehicle classes
Bloomberg New Energy Finance Predicts EV Sales Tops ICE by 2040
Electric Vehicle Outlook 2017, Bloomberg New Energy Finance
Price Comparison on 2017 Hyundai
Source: A Public Power Guide to Understanding the U.S. PEV Market – Navigant Research
PEV Forecasted Electric Consumption – U.S.
Source: A Public Power Guide to Understanding the U.S. PEV Market – Navigant Research
Ease of Getting Rooftop Solar
6/15/14 Confidential 20
2017 Strategic Directions: U.S. Electric Industry Report, Black & Veatch Insights Group
2017 Survey of 533 U.S. Electric Industry Participants
Which of the following best describes your company’s activity related to energy storage?
4. Higher Customer Expectations
• Customers want to be able to do business with you 24/7/365
• They want to be able to interact with their utility through multiple platforms: live voice, IVR, website, social media and still walk in your door
• Expect 21st century services from their provider • Less loyalty and less tolerance for mistakes • You are not being compared just to your
neighboring utility, but also Amazon, Google, Zappos and dozens of other providers of service
As everybody on call knows, information is available today 24/7 and customers expectations of their utility data is no different. We live in a world of instant gratification and if customers can’t get information from their utility, they will find ways to get it from others. This means that more and more service providers will be inserting themselves between your utility and your customers. Technology in other utility industries (cable, phone, internet) know as soon as or before their customers do when they are without service. Customers expecting the same from electric and water utilities.
Nearly Half of the 150M US Electric Customers Have Smart Meters
Source: U.S. Energy Information Administration, Annual Electric Power Industry Report
Energy efficiency is working.
Electric “Players”
Google is the largest consumer retail owner of renewable generation. They also purchased Nest (smart thermostats). It is no secret that they plan on moving into the electric retail space. Comcast now bundling electricity with their triple play (voice, video, inet) in Pennsylvania. Direct TV and Dish following. Met with an colleague that now works for EnergyHub and he shared that both of these players are working with aggregators to be the electric service provider to their consumers and are planning to provide discounts to bundle these services. Built with our patented solid oxide fuel cell technology, Bloom's Energy Server® is a new class of distributed power generator, producing clean, reliable, affordable electricity at the customer site. Oracle buys Opower for $532M in 2016.
Innovation → Disruption
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Uber created in 2010. Now valued at $68B
5. The Silver Tsunami
Most saw retirements slow during the recession years but in the past two, they have picked back up.
Utilities Have Biggest Risk
• 78 million Baby Boomers will retire over the next 17 years, but 75% plan to continue working.
• Only 50 million Generation X exist and they are in short supply.
• 76 million Generation Y are entering the workforce.
Source: Congressional Research Service, “Retiring Baby-Boomers = A Labor Shortage?” Jan. 2008
Within the baby boomer segment, the utilities industry is their largest employer.
“2015 Workforce Survey Summary Report: American Public Power Association
APPA’s 2015 Workforce Survey 193 respondents indicates that:
• A significant portion of the public power workforce will be eligible to retire during the next five to seven years;
• The positions that will experience the most retirements may also be the most difficult to replace: skilled trades, senior managers, general managers/CEOs, and engineers;
• The most significant challenges created will be the loss of knowledge due to retirements; finding replacements; and the lack of bench strength within organizations; and
• Public power utilities need to do more to plan for their future workforce needs.
“2015 Workforce Survey Summary Report: American Public Power Association
APPA’s 2015 Workforce Survey
How to Impact Change
• Formulate strategic planning and policy development that focuses on key utility priorities
• Understand where your utility can thrive in this rapidly changing landscape
Strategic Roadmap to Success
Communicate & Educate
Strategic Dialogue
Alignment & Focus
Utility Value • Financial
• Local control • Reliability • Customer Service
…Know Your Utility’s Value
• Staff, Policy Makers, Community Alignment
• Strategic Areas of Focus/Goals
…Core Areas of Focus
• Staff & Policy Makers • Community Values • Customer Needs
…Values and Vision
• Value Messaging and Communications • Customer Education & Engagement
…If You Are Not Telling Your Story, Someone Else Will
Thank You
Bill Smart Sr. VP Business Development
Hometown Connections [email protected]
303-940-7331
