The future of the electricity utility – decision time for US stakeholders – by Paul Jordan

Published: 16 February 2018

Last month, the Energy Systems Catapult’s (ESC) Director of Business Development, Paul Jordan, travelled to Chicago alongside Grantham affiliates, Dr Jeffrey Hardy and Dr Chris Mazur, to engage with participants from the US energy supply chain, including a ‘Decision Theatre’ workshop as part of the Utility 2050 project.

Below, they reflect on the findings coming out of the workshop, the differences across the pond, and the potential for collaboration.

The Utility 2050 project, originally conceived by the Energy Research Partnership, offers insight and guidance to policymakers, regulators, investors and consumers to help them navigate the uncertainty faced by the UK energy sector as it undergoes transformation to a low-carbon model.

As part of this project, a team of researchers at the Catapult, Imperial and the University of Leeds are using innovative interdisciplinary approaches to explore the big questions facing the energy industry: future market sizes, regulatory priorities, enabling technologies, customer preferences and more.

As ESC prepares to take ownership of the Utility 2050 project to achieve our bold vision for the UK energy sector, international collaboration will be critical – both to share learning and help build solutions for the future.

‘Decision Theatre’ workshops are an important way to test research findings with international stakeholders. Jeffrey and Chris used the opportunity in Chicago to present their recent paper on “Valuing energy futures; a comparative analysis of value pools across UK energy system scenarios” and forthcoming paper on consumer preferences for alternative energy utility business models.

Together with nine North American participants representative of established utilities – a state regulator, an international oil and gas company, an energy distribution network, a power generation developer, an investment bank, and an energy stakeholder platform company – we gathered round the table to discuss clean energy futures and how utilities can break into new markets.

Paul also shared the Energy Systems Catapult’s mission, explaining our on-going work in the energy sector as well as our capabilities and assets, while as a wider group we discussed the possibility of developing international collaborations in the future.

So, what are the most important changes needed to enable utilities to access new markets in the energy transition?

One thing is for sure, the United States, European Union and United Kingdom are all seeing similar transformations within their energy system, and recognise the importance of accessing new markets. We will be writing up in full the findings of the workshops for an academic journal, so we can’t reveal too much of what was said yet, but in all, some common themes arose:

  • The need to place a cost on carbon to provide utilities with investment certainty.
  • The need to create markets that allow supply- and demand-side flexibility to monetise the value they represent to the electricity system.

There were also some notable differences between the voices from the UK and EU, and those from the US. First, in Chicago, workshop participants focused on finding the right triggers and incentives to ensure all consumers “do the right thing”, whereas in the UK and EU groups, there was an emphasis on “protecting consumers”, particularly those in vulnerable situations, from harm through regulatory and other approaches.

Secondly, in the US workshop, there was a strong emphasis on deregulation at a Federal and State level, aiming to drive innovation and efficiency. In contrast, in UK and EU-based events, discussions were focused more on how to protect consumers against market innovation – for example, if a company is bringing a risky proposition to market.

Case study: The utility of the future – as seen by experts in the US

In Chicago, we also met Professors George Gross and Peter Sauer, academics at the Electrical and Computer Engineering (ECE) Department at the University of Illinois and lead facilitators of a study into the utility of the future called NextGrid.

Paul had the opportunity to provide insight into activities at the Catapult and our views on future utilities, as well as looking at possible areas for future engagement.

Led by the Illinois Commerce Commission, the 18-month consumer-focused project aims to identify, research, and develop options to address issues facing Illinois’ electric grid, its users, and the utilities who operate it. While the study is in its early stages, it is already clear that Illinois is facing many issues in common with the UK including:

  • A rise in distributed generation and behind the meter devices.
  • A need for smarter grids.
  • Data and cyber security issues.
  • The role of regulation in managing the above.

In the UK, these are being tackled through projects such as our Future Power System Architecture (FPSA) as well as the Energy Networks Association‘s Open Networks and the Department for Business, Energy, Industry and Strategy and Ofgem Smart Systems and Flexibility Plan.

With shared goals and challenges like these, we’re looking forward to lots more collaboration with our colleagues in the US. Watch this space!

The Chicago Decision Theatre was organised by the UK Science and Innovation Network (SIN) and the Department for International Trade led by the team based at the British Consulate General in Chicago. Dr Kyle Dolan, SIN lead at the Consulate General, did a terrific job in attracting senior stakeholders to the event and was a wonderful host for our visit. A huge thank you to Kyle and the team at the Science and Innovation Network and Department of International Trade for making the trip a success.