The US utility sector progresses towards clean and modern

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The Smart Electric Power Alliance’s first Utility Transformation Profile reveals carbon reduction commitments as a key first step.

The modernisation and smartening of the grid over the past two decades or so has gained a new dimension with the drive towards renewable energies and latterly the commitments globally to rapidly reduce carbon emissions.

Utilities are being obliged to undergo a fundamental transformation to become ‘clean’. This has seen a growing number focussing on carbon reductions, with business plans and publicity materials specifying these as a new parameter alongside others such as cost benefits and rates impacts.

As with all businesses individual utilities face their own challenges and are transforming at different paces. But where is the industry at as a whole?

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In short, making progress but still much work remains, the US Smart Electric Power Alliance (SEPA) has found in its first Utility Transformation Challenge, which was designed to assess the progress of electricity utilities across the nation.

“The future modern carbon free energy system will require changes to almost every part of a utility’s business, from their culture, energy mix, operations, infrastructure to their business processes,” commented Julia Hamm, President and CEO of SEPA at the launch of the findings.

The Utility Transformation Profile was compiled based on input from 135 utilities representing 83.2 million – almost two-thirds – of US electricity customer accounts across the four areas of clean energy resources, grid modernisation and enablement, utility corporate leadership and external actions and engagement (e.g. regulation).

Key findings that emerged are that meaningful commitments to carbon reduction are an important and necessary step for utilities and that the transformation goes beyond clean energy resources and a comprehensive approach is needed across all aspects of the utility business.

Another is that a transformation of the utility culture is needed with leadership, transparency and accountability. Utilities also cannot achieve a carbon-free system alone and should work with external stakeholders such as service providers, academics and others.

Leaderboard utilities

Based on the findings, SEPA identified the top 10 American utilities that have made the most progress. These are (in alphabetical order):

  • Austin Energy, TX
  • Consolidated Edison of New York, NY
  • Green Mountain Power, VT
  • Holyoke Gas and Electric Department, MA
  • Los Angeles Department of Water and Power, CA
  • Pacific Gas & Electric, CA
  • Sacramento Municipal Utility District, CA
  • San Diego Gas & Electric, CA
  • Seattle City Light, WA
  • Southern California Edison, CA

SEPA indicates that 90% of these utilities have adopted a 100% carbon reduction target and 40% a 2035 or earlier target, 90% are engaged in integrated distribution planning and 90% are utilising technology partnerships with other companies to encourage residential carbon reduction.

“Utilities that lead in the clean energy transition have shown that they can thrive in the process,” said Ralph Cavanagh, Energy Co-Director Climate & Clean Energy Programme at the Natural Resources Defense Council.

“But we cannot be complacent. The progress that these ten utilities have achieved, and many others like them are achieving, now needs to accelerate to a low carbon future.”

Transformation recommendations

Based on the results, SEPA has formulated five recommendations for utilities.

These are:

  • to strengthen carbon reduction commitments;
  • address transformation comprehensively across the organisation;
  • embrace clean energy as a core element of the utility mission;
  • engage customers and others early and often, and
  • integrate equity considerations in programmes to ensure all community members are able to participate.

“The transformation to a clean and modern energy system is complex and each utility’s journey will be unique. We believe that adopting and implementing these recommendations can help utilities to accelerate their smart transformation,” concluded Sharon Allan, SEPA Chief Strategy Officer.