Over the past few years, I have begun to study the changes that are occurring in the public utility space. These changes are massive and are going to require public, government and business interests to align in ways that achieve the overall goal of carbon neutrality by the year 2050.
The overriding trend seems to be for utilities to focus on distribution of power throughout the central grids, maintain reliability of those central grids, and determine the least cost power options to benefit the ratepayers, which are the customers of the utility.
Less emphasis will be placed on actual power generation by Utilities themselves in the future, in my opinion. The power generation space is becoming rapidly decentralized and ideally subject to free market forces and less to artificial government subsidies. Producers will have to start considering power generation that considers both the environmental and social costs, in addition to financial considerations.
Ratepayers, whether they are families or businesses, want reliable power at a price they can afford. Utility companies have to remember that they are public benefit companies and have a fiduciary responsibility to their ratepayers.
The decentralization of power generation, through concepts like district energy, microgrids, renewable energy, are the future of power generation and not fossil fuels. Fossil fuels are a 19th century technology that has helped distort our relationship with nature and has hastened our reliance on instant power.
An area that Utilities are going to have to focus more on as decentralized energy production increases is how to deal with the “spikiness” of renewable energy and microgrids as it relates to centralized grids.
Being able to handle multiple energy sources is the new normal for Utilities and reliance on things like pipelines and large-scale coal production should be transitioned away from in favorable of renewable energy and yes, even nuclear power generation as a new transitional baseload fuel source until renewables are sufficiently developed with better battery storage technologies and more efficient power generation for renewable technologies.
The opportunity for Utility companies is to reinvent themselves as energy traders rather than energy producers. The distribution of power to homes and businesses will continue to be the primary focus of Utilities with supply being more a trading function rather than actual production by Utilities.
Ideally, the regulatory burden of federal and state regulation will be redefined to oversee energy production by fossil fuel entities to ensure their gradual phase out over the next twenty-eight years and things like capacity payments, renewable energy credits, carbon taxation/offsets and carbon capture sequestration will become peripheral to the main issues of lower cost technologies that have less social and environmental impacts than fossil fuels.
If we truly factored into fossil fuel generation, the social costs (the fouling of land, pollution of groundwater, excessive use of water to mine fossil fuels and the many wars attributed to fossil fuel generation and wealth) and environmental costs (air pollution, greenhouse gas emissions and true costs of long distance fossil fuel distribution) then we would understand as ratepayers that we pay far more for fossil fuels than fossil fuel companies, lobbyists, special interest groups and even governments own up to. The addiction to fossil fuels is purposeful and pernicious, just like cigarette smoking and other things that are just not good for us.
These issues are continually being discussed, but I have this sinking feeling that we, as ratepayers, have little or no say, in the public benefit portion of the role of Utility companies. As I have been saying for the last decade or so, until we take the power away from the producers and shift it to what the public really needs and wants, we will remain in this never-ending addiction cycle that includes wars, strife and unrest.
The central grids are marvels of modern civilization.
What needs to be redefined is how the sources of energy and Utility companies deal with the transition away from fossil fuels. By letting fossil fuel companies continue to have the power (pun intended), we risk a lot more than just easy switch on the power we have come to expect.
The coming electrification with EVs, self-driving cars, quantum computers and artificial intelligence will require a new magnitude of power generation that Utilities have to budget for, especially if fossil fuels are going to be considered personas non grata.
We see with the war in Ukraine that there are forces like Russia, China and India that wish to rely on fossil fuels far beyond 2050 so the question remains: Do we have the public and political will to stay the course to systematically reduce the usage of fossil fuels?
I fear that the answer is we are like that opioid addict that needs that next pill or shot and will complain ad infinitum about the cost of fossil fuels but continue to use them. The argument is that we are only individuals and cannot do anything about the status quo.
What do you think?