Challenging the status quo
- Posted on September 27, 2011
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AS AN ENGINEER AND A UTILITY MANAGEMENT CONSULTANT, Boreas Group co-founder Robert Sarfi is widely recognized for his experience in delivering business vision and technology solutions to electric utilities.
This year, Energy Central asked Sarfi to lead the Operations committee for the Knowledge2011 Utility Executive Summit, bring his experience to bear on the issues affecting electric utility operations this year, and in years to come.
In advance of the Knowledge Summit, to take place in early November, Intelligent Utility asked Sarfi to shed some light on the issues intelligent utilities are facing as they advance new technology and new services. His comments, edited for style and length, follow.
INTELLIGENT UTILITY Robert, from your experience, what do you see as the biggest issues facing utility operations heading into 2012?
SARFI To me, there are a series of factors that are converging together. I won't say they're almost creating the perfect storm, but they definitely have the makings to transform the entire paradigm in which utilities run their operations.
From a regulatory perspective, there's a lot of uncertainty as to what's going to happen with renewables, with the integration of renewables, storage, and certain aspects of energy conservation. To me, demand response is well understood - everybody gets demand response right now. I think a lot of people are saying, `I think I need to address renewables,' because renewables will definitely change the way they operate. But it's unclear, with the economy heading the way it's heading, with the elections in 2012 in the United States, where that's going to go. There's no money for subsidies. It's unclear what kind of appetite the politicians have for it.
The price of natural gas is still pretty low, as well, and commodity prices are bouncing up and down. But we haven't seen that consistent upward trend that people anticipated seeing, so it's just making that situation very volatile.
At the same time, we have seen some really large, ambitious projects to integrate renewables throughout North America, and I'm not sure if they've gained as much momentum, or as much support, as the politicians or the utilities anticipated they would. But what they did demonstrate to us was that we don't really have the technology offerings to assist the operators in managing those resources. And, quite frankly, a lot of the operators don't necessarily have the skill set to be able to manage all of these data points coming in, to make the most effective decisions for the utility.
INTELLIGENT UTILITY What about new technologies and technology integration? What challenges, if any, are you seeing there?
SARFI Quite frankly, it's the first time in my career I've seen the utilities wanting more in terms of technology than the vendors actually have to offer, which to me is downright scary. What's kind of curious about that is there are a lot of companies that received an incredible amount of clean tech funding to more efficiently run the grid. And I think the investors simply haven't seen the kind of momentum that they anticipated from it. They haven't gotten the returns, and we've seen a few of them exit. So, with utilities chomping at the bit for more technologies, you also have a vendor market space where, quite frankly, they don't have an offering to entirely meet the needs of the market, and they're also tapped out in terms of funding to go out on the edge to give the utilities what they want. So it's almost a Catch 22 situation. I think we're going to get there, but it's taking a lot longer.
INTELLIGENT UTILITY You mentioned new skill sets needed.
SARFI When it comes to resources, and this is interesting, you go to some of the European countries, you even look at some of the Canadian utilities, and the distribution system operator or distribution dispatcher has more of the skill set of a transmission system operator. Whereas here, it's a different skill set, maybe one that's focused more on qualitative measures and qualitative decisions as opposed to analytics and more of an engineering background.
I think the fear that's coming in, especially in emerging technologies for managing renewables, storage, and self-healing, as they're coming on, and they aren't really mature, you actually need quite a high skill set of person to be able to interpret the data to make sure the software is doing what it's supposed to be doing. And you can't all of a sudden snap your fingers and say, "Okay, workforce, all of a sudden, your electrical engineers with 15 years' operations experience can understand this data." So how you transition the workforce, I think, is going to be a real problem.
That's the challenge I think these utilities are going to face. It all comes down to the load flow and understanding the behavior of the system. Just by sending people on courses, or hiring engineers, you aren't necessarily going to get that level of understanding so that in a situation with a sense of some urgency, they're going to be able to make the right decisions.
The problem is, if people think transmission's complicated, if they look at the smart grid and the number of data points, distribution is going to make transmission look like child's play.
INTELLIGENT UTILITY Where do you feel the electric utility is headed with smart grid?
SARFI There is a proliferation of distributed renewables, storage, electric vehicles, all of these new technologies that are coming in, and there are three possible scenarios.
One is mass adoption, in which case we're going to have to figure it out very quickly by necessity.
Two is complete rejection, which, quite frankly, is actually not a bad scenario, because we don't have to deal with these problems. I don't mean to sound negative, but there's some comfort in status quo.
What I think is the worst possible scenario is restrained adoption and deployment of the new technologies, simply for the fact that we won't have enough data to really understand the true behavior of the system. And the vendors won't have enough momentum to truly invest in technologies that meet the needs of the marketplace.
So that middle-ground scenario, which is kind of a happy medium, that is the scenario that I fear and, with the economic environment, it's probably going to be the most likely scenario. You look at some of the Canadian jurisdictions that have gone towards a larger portfolio of green energy and increased the rates. Now their ratepayers are saying, "Hey! Uncle! We can't afford it!"
And rightfully so. They truly can't. So I think, overall, there's a lot of uncertainty. But when you look a the solutions that people are cobbling together, it somewhat concerns me. In order to bridge the gaps in the marketplace, decisions are being made to solve specific problems, so these are point solutions to issues and problems. And I don't think people have a long-term, holistic view of how to make everything work together.