EnergyBiz - January/February 2008 - (Page 46) ‘TiPPing PoinTS’ reacheD in The U.S. UTiliTy inDUSTry the only certaInty about the U.S. utility industry as we enter 2008 is that by 2018 it will be dramatically different from what it is today. Economic, societal, political and technological forces have reached numerous “tipping points” that are going to force those dramatic changes. In November 2007, Sierra Energy Group, the research and analysis division of Energy Central, sponsored Knowledge2007, a conference of senior-level utility technology practitioners, including 24 Chief Information Officers (CIOs) to explore these changes and their implications. Two of the major sponsors of the conference were Oracle Corp. and IBM. Oracle and IBM were invited to submit articles exploring the future for this section of EnergyBiz; those articles are included below. The two articles—one by Guerry Waters, Vice President, Industry Strategy and Marketing, Oracle Utilities; and one by four writers from IBM: Michael Valocchi, Global Energy and Utility Industry Leader for IBM Global Business Services; Allan Schurr, Vice President, IBM Energy & Utilities Industry Strategy & Development; John Juliano, Energy & Utilities Industry Consultant; and Ekow Nelson, IBM Institute for Business Value Leader—provide a fascinating look into the future. Waters looks closely at the future of utilities, particularly at the issues around development of a “Smart Utility.” As Waters points out, the issues and prognosis are not as simple as some would make them. The IBM writers look at what it will take to develop “Smart Consumers” to match up with those “Smart Utilities.” Again, the answers are not simple and there likely will be a myriad of approaches and attitudes among electric consumers of the future. The reasons these changes are going to continue to accelerate and that various tipping points have been reached are fairly easy to see. They include: Ô Figure 1 Do you think “Intelligent Utility Enterprise/Smart Grid” is the wave of the future for the U.S. utility industry? The U.S. faces a serious supply/ demand disconnect by 2018. Unless something dramatic happens, there will not be nearly enough electricity to go around. Already some parts of the country are feeling the pinch. Regulatory and legislative uncertainty (especially regarding global warming and environmental issues) makes it very difficult for utilities to know which way to go; building new generation of any type except “green energy” is very difficult and green energy cannot close the growing projected gap between supply and demand. No Yes 6.6% 93.4% Ô Fuel prices continue to escalate and reliability continues to decline. Increasing restrictions are being placed on fuel selection, especially coal. A whole generation is nearing retirement and finding adequate replacements in the smaller, younger generations is proving increasingly difficult. The entire U.S. transmission/distribution system is aging and becoming less stable. It is very difficult to site new transmission lines which will be needed to deal with supply/demand issues. Ô Ô While the problems are clear-cut, the solutions—as Oracle and IBM point out—are not set in place. At best, Smart Grids and Smarter Consumers may be only portions of the answers, and the development of those two concepts still is evolving. While most utility executives see the problems, they still are fairly uncertain about the solutions and still have a considerable distance to go to have them in place, as seen in a December Sierra Figure 2: Does your utility have an overall plan for development of an “Intelligent Utility Enterprise/Smart Grid”? IOUs No 42.9% Municipals Yes No 52.6% Yes 47.4% 57.1% Co-Ops No Yes 33.3% PUD/Federal No 54% Yes 46% 66.7% 46 E n E rgyB i z January/February 2008 spEciaL aDvErTising sEc TiOn
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