For more than a century, utilities have operated with one overarching goal: to provide reliable power to their customers.
That mission, by its very nature, has meant taking a conservative approach to innovation and technology.
But the energy industry is changing rapidly, and the old way of doing things — building centralized fossil fuel power plants that send power along a grid largely unchanged from Thomas Edison’s day — are no longer sufficient.
The challenges of creating a smart grid, integrating renewables into that grid, the electrification of vehicles, increased energy efficiency and the prospect of decentralized power have created incredible opportunities to build a cleaner, more sustainable and secure energy future.
But getting utility companies to adopt those technologies brings its own set of challenges. How does a highly-regulated, risk-averse industry adapt to such disruptive changes while still protecting its mandate to provide reliable, affordable power?
Enter Advanced Energy Economy and MIT’s Industrial Performance Center — and welcome them to San Antonio, Texas, where they’re jointly hosting a forum with CPS Energy on June 18, the second in a series of CEO forums tackling that very question.
Advanced Energy Economy bills itself as a business organization dedicated to accelerating the adoption of advanced energy technologies into the marketplace — but it also has a strong think tank streak, as it grapples with how to create the regulatory environment and public policies necessary to do that.
Hemant Taneja, a managing partner at General Catalyst Partners, co-founder and chairman of AEE, says the group’s vision is a “prosperous world that runs on secure, clean and affordable power.”
AEE engages the entire range of players in the energy industry, from utilities and their regulators to elected officials and policy experts, and of course, the advanced energy companies working to create solutions to some of the industry’s most pressing challenges.
Taneja partnered with Tom Steyer, a hedge fund manager and political activist, to found AEE. Taneja then teamed up with Dr. Richard K. Lester, who founded and has headed up the Industrial Performance Center at MIT for almost 20 years, to convene utility executives, energy innovators and state regulators to help develop a framework for innovation in the power sector.
The Industrial Performance Center pulls in faculty and students from across MIT to study developments in innovation, productivity and competitiveness. The center recently completed a major study of national and regional strategies for accelerating the adoption of innovative low-carbon energy technologies.
“We see the electric power sector entering a period of very rapid innovation,” Lester said, “and that is creating some unique challenges for utilities, innovators and governments.”
To understand those challenges, and find ways to remove barriers to adoption, AEE and IPC wanted to create a forum where CEOs from across the industry could meet and speak frankly, with the ultimate goal of creating a concrete action plan going forward.
“We don’t want this to be an academic exercise,” said Taneja, who has been investing in the energy sector for the last decade.
The first meeting was held in March at MIT, and one thing became clear, he said: that a regional approach would be crucial, given the fragmented nature of energy markets in the U.S.
“One thing that kept coming up in that meeting,” said Lester, “was the model in Texas, and how well it’s working in a number of areas.”
Cris Eugster, CPS Energy’s executive vice-president and chief strategy and technology officer, attended that first meeting.
Attendees’ interest was piqued by several CPS Energy initiatives, Eugster said, such as its commitment to decreasing the carbon intensity of its generation fleet by retiring coal and adding natural gas and utility scale solar and its aggressive energy efficiency and demand response programs.
The group is also interested in what Texas is doing statewide: its market-based approach, wide scale embrace of wind, the shale gas revolution and the recent transition of the electrical grid to a nodal market system.
Invited to the closed door session — Taneja and Lester say it’s crucial that top executives feel comfortable to speak freely about the challenges they face — will be CEOs from investor-owned utilities from around the country, publicly-owned utilities like CPS Energy, state regulators, representatives from the electrical grid operator and top energy technology firms.
Additional forums will be held in other parts of the country later this year; the next will be held at the Aspen Institute in Aspen, Colorado.
Eugster said CPS Energy is honored to host AEE and MIT in San Antonio: “We look forward to sharing strategies for how to drive innovation and value in the utility sector.”
Taneja and Lester, too, are looking forward to the visit.
“We want to understand better what’s working in Texas,” said Taneja, “and see if there are lessons to be learned across the industry.”