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Episode #37: ‘A Day of Reckoning from Clean Energy Targets’ with Greg Bernosky, Director at Arizona Public Service [an Energy Central Power Perspectives™ Podcast]

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The ‘Energy Central Power Perspectives™ Podcast’ features conversations with thought leaders in the utility sector. Each two weeks we’ll connect with an Energy Central Power Industry Network...

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  • Jun 15, 2021 11:30 am GMT
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Lots of utilities are sharing their clean energy goals for 2030, 2040 and beyond, as a continued focus on climate change and decarbonization appropriate takes center stage. But declaring vague clean energy targets decades in advance can, arguably, be the easy part of the process, the real challenge comes in living up to those promises and remaining accountable to investors, customers, and regulators to meet those goals. Setting and meeting these clean energy targets is the right thing to do, but if it was easy then we would already be there, but as today’s guest knows: the proof is in the pudding.

The Energy Central Power Perspectives Podcast is joined this week by Greg Bernosky, the Director of Corporate Strategy at Arizona Public Service (APS). APS made waves in early 2020 by publicly pledging to provide 100% clean, carbon-free power to its customers by 2050, with interim targets of 65% clean energy and 45% renewable energy by 2030. As one of the key voices in developing those goals, Greg knows that these weren’t just pulled out of thin are, but were rigorously debated and evaluated internally before sharing with customers and stakeholders. And while he agrees the goals are ambitious, he remains confident that the utility can deliver. As he notes, some utility leaders may fear a day of reckoning if it becomes clear their clean energy goals are too ambitious, but he and his team at APS both recognize the bigger day of reckoning will come if the industry doesn’t do enough to prevent to worst impacts of climate change. To that end, Greg walks host Jason Price and producer Matt Chester through the mindset of APS executives and outlines the roadmap they have for meeting these goals.

 

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See also an exclusive bonus clip at the bottom of this post only available to members of Energy Central to hear!

Thanks to the sponsors of this episode of the Energy Central Power Perspectives Podcast: West MonroeEsriAnterix, and ScottMadden

 

Key Links

Greg Bernosky’s Energy Central Profile: https://energycentral.com/member/profile/greg-bernosky/about

The APS 10-Year Strategic Plan: https://energycentral.com/c/cp/aps-10-year-strategic-plan

 

 

TRANSCRIPT

Jason Price: 

Hello and welcome to another episode of the Energy Central Power Perspectives Podcast: the podcast where we deep dive into conversations from high-level executives and established thought leaders in the utility space, bringing the boardroom insights to our listeners. I'm your host, Jason Price of West Monroe coming to you from New York City. I'm joined by my podcast producer and Energy Central's community manager, Matt Chester. Matt, today we're going to talk clean energy commitments at the utilities, specifically the what's and how behind the transition to clean energy, and what's it been like for large IOUs. Do you think the job is done?

Matt Chester: 

I don't think anyone is yet ready to hang the mission accomplished banners. We have some ambitious commitments coming from utilities, from private companies, from policymakers, and more, but there's still a lot of work to do to make good on those promises.

Jason Price: 

I fully agree. Every state has different mandates and moving at their own pace. But today, we have the pleasure of speaking with one of the big movers and shakers toward clean energy in the utility space. In just a moment we're going to be joined by Greg Bernosky, a director at Arizona Public Service or APS who is helping leading utility and its efforts to adapt clean and renewable energy generation. But before we bring Greg in, let's give a quick shout-out to our sponsors for this podcast who made this episode possible.

Jason Price: 

To West Monroe: West Monroe works with the nation's largest electric gas and water utilities and their telecommunication grid modernization and digital and workforce transformations. West Monroe brings a multidisciplinary team that blends operational expertise, customer experience, and technology to address the challenges of modernizing aging infrastructure, transportation electrification, ADMS deployments, and challenges presented by the proliferation of TER and cybersecurity.

Jason Price: 

To Esri: Esri is an international supplier of geographic information and that includes GIS software, Web GIS, and geodatabase management applications.

Jason Price: 

To Guidehouse, formerly Navigant Research: Guidehouse is a premier market research and advisory firm covering the global energy transformation.

Jason Price: 

To Anterix: Anterix focuses on delivering transformative broadband that enables the modernization of critical infrastructure for the energy, transportation, logistics, and other sectors of our economy.

Jason Price: 

And to ScottMadden: ScottMadden is a management consulting firm serving clients across the energy utility ecosystem. Areas of focus include transmission and distribution, the grid, edge generation, energy markets, rates and regulations, corporate sustainability, and corporate services. The firm helps clients develop and implement strategies, improve critical operations, reorganize departments and entire companies, and implement a myriad of initiatives.

Jason Price: 

Today's guest is Greg Bernosky of Arizona Public Service, who offered to jump on the power perspective and share with all of us exactly the clean energy commitments at APS. In January 2020, APS publicly pledged to provide 100% clean carbon-free electricity to its customers by 2050, which included a 2030 interim target of 65% clean energy and 45% renewable energy and the phase-out of coal completely by 2031. At this time, and still, to this day, these commitments have been some of the most ambitious seen across the utility sector. And a key voice in developing those goals at APS was Greg Bernosky.

Jason Price: 

Greg joined APS in 2007, working his way up from a transmission line citing consultant to his position today as director of corporate strategy for APS and its parent company Pinnacle West Capital Corporation. But in talking to Greg, one thing is clear: APS’s goals aren't just to comply with government regulation. Instead, Greg believes his company wants to give their customers and stakeholders what they want and send a message about what utilities can and should be doing amid this energy transition.

Jason Price: 

Only time will tell if APS has committed to more than it can meet. While the topic of adopting clean energy and sun-setting fossil fuel generation is nothing new, the scale at which APS is pushing for this to happen has been mostly unrivaled. As one of the leading voices in that push, we're eager to chat with Greg about the ins and outs of what that looks like from within the utility. Let's get inside and take a look. Greg Bernosky, welcome to the Energy Central Power Perspectives Podcast.

Greg Bernosky: 

Thank you, Jason and Matt. I very much appreciate the hardy introduction and the opportunity to join you, and really appreciate the conversations that you all have been hosting on these topics.

Jason Price: 

Great. Greg, we are thrilled to have you on Power Perspectives. Over the years, Arizona has had its fits and starts in addressing the energy transition. Can you give us a background on the energy landscape in Arizona?

Greg Bernosky: 

In sum, it's complicated. We've had a lot of different policies and evolutions of policy over time. We have a unique regulatory structure. We have unique climates. There's a lot of uniqueness to Arizona and our condition. I would describe a few fundamentals as important to think about when you look at what's going on in Arizona. For one, it's often sunny and hot for a good chunk of the year, which drives a lot of our energy needs. At the most significant highest levels during the year are driven by that summer air conditioning load, the surge of use in those late-afternoon and evening hours when folks are coming home from work and school and just needing to be cool and comfortable in their homes.

Greg Bernosky: 

We also are an area of high customer growth. We're one of the fastest-growing regions in the country. We have a lot of folks to Arizona from other parts of the west and throughout the US. We have a growing population, and energy needs to manage around that. We've got a significant amount of resource needs and growing resource needs.

Greg Bernosky: 

We also have a very diverse state. We have folks that live in concentrated metropolitan areas. We have a lot of rural areas, and we have needs that are very different in the Desert Southwest but also at the tops of mountains. Our APS, specifically, serves the bottom of the grand canyon and the tops of some of our mountainous areas and Alpine regions. We have a very unique set of customer needs throughout our own service territory.

Greg Bernosky: 

We're also next door to California and what happens there matters a lot to us from an energy usage and policy perspective. We have to navigate our system in the context of that large big brother next door that has quite an influence on regional/national energy policy. But we have our own state dynamics that are just unique in terms of how energy regulation is managed, who has jurisdiction over it, and who's driving that. Frankly, that, in the more recent years, has led us and others to forge our own paths when it comes to what do we want to do next to meet our energy needs and our customer interests.

Jason Price: 

All right. Well, let's discuss the APS commitments. Like I said, 65% clean energy by 2030 and 100% clean energy by 2050. How are those levels determined, and what exactly will be required between now and then to achieve these goals?

Greg Bernosky: 

I'll start with your second question first. Three things come to mind: diligence, innovation, and collaboration. I think, frankly, the diligence part of this is going to require a lot of us as utilities, as customers, as stakeholders, policymakers to really put our heads down and work towards these goals. It's one thing to say them and identify them. I'll talk a little bit about how we came to identify our goals. But it's going to take a lot of work to achieve them. Frankly, we know that there's been a lot of innovation and breakthrough technology that has happened over the last decade that has shaped our energy options now. There are many more things coming and things we haven't thought of yet that will shape the next 10 years and 20 years and beyond. That innovation is going to be critical for us to optimize how we provide energy for customers in a reliable and cost-effective way. That obviously requires collaboration across many different fronts of the economy, be it utilities, policymakers, customers, stakeholders, investors. The diligence, innovation, and collaboration are critical in getting there.

Greg Bernosky: 

You mentioned 65% clean energy by 2030, 100% clean or carbon-free by 2050. We have the advantage at APS and in Arizona of operating the nation's largest nuclear power plant in Palo Verde nuclear generating station. That is a 100% carbon-free resource that has an exceptional performance record and production of clean energy for not only Arizona but the Southwest region. We believe that that is a fantastic tailwind from which to build our carbon-free aspirations going into the near term for 2030 and over the long term. We really want to lean into using Palo Verde as the anchor for what has become one of the most diverse and significant renewable portfolios in the Southwest.

Greg Bernosky: 

We have well over a gigawatt of solar generation on our system. We have a diverse type of solar, not only grid-scale large resources in the usual locations like the Desert Southwest, but we also have solar facilities in the north and in areas where, if you have a weather system passing through a region of the state, that doesn't take all of our solar down. We've been able to geographically diversify where we have it. We have a concentrated solar photovoltaic. We have a lot of rooftops solar on homes and businesses. We have solar and abundance, and we have a very diverse both technology and geographically distributed across our state. That is another significant tailwind for how we think about achieving these goals.

Greg Bernosky: 

Then, just continuing to look at and invest in the right level of wind resources, energy storage, looking at the customer as a resource, and thinking about how to pair energy efficiency and things that are happening behind the meter into the mix going forward. We really thought we were coming from a strong starting position to be able to build towards a 100% carbon-free future. I'm excited about our potential to get there.

Jason Price: 

Terrific. But everyone has set goals, and these goals are far into the future. I want to ask you about accountability. How do you address accountability to these goals? Who will be, ultimately, accountable if these goals are not met?

Greg Bernosky: 

Well, I know we are 100% behind getting to these goals and making them outcomes that we will achieve. Our CEO, Jeff Goldner, doesn't say things out loud that he doesn't intend to follow through on or have the organization follow through on. We are 100% behind him in achieving those outcomes. We answer to our customers, investors, and regulators. All of them want to see this transformation occur. Each of them have different needs in getting there. Ultimately, they are some of the highest level of accountability that we can ever produce. Certainly, we expect that we will hold ourselves to metrics and gauge our performance year over year. I know our regulators and stakeholders will expect the same. But at the end of the day, we wouldn't have said this and done this and moved this path, if we weren't all in on getting there and making sure that we're bringing customers, stakeholders, investors with us.

Jason Price: 

Okay. Well, Greg, setting energy goals isn't just a feel-good measure. It's hard work, and there are challenges to address, like cost and reliability. So my question to you is, how has APS balancing those goals with the challenges that some people worry will be introduced by more renewables on the grid?

Greg Bernosky: 

It's a great and important question, but frankly, we don't worry about more renewables. We are in a mindset of welcoming them, optimizing them, and finding the greater and greatest value for them and in front of them. While there are certainly operational considerations that we and other utilities will need to navigate as we see higher and higher levels of intermittent generation, it doesn't create something we need to worry about, shy away from, work around. It really is a call to action to say, "How do we best integrate? How do we optimize? What's the pairing of technologies that we need to see happen in order for these to be the most efficient use of energy for our customers?" We think that price signals and how our rates are designed and structured play a significant role in how we can integrate renewables into our energy mix going forward.

Greg Bernosky: 

We need to see technology and want to send the right signals to have technology scale, see efficiency and cost improvements. We want to test what shows promise and move past what doesn't. We have a lot of work we do, whether it's pilots or limited deployment projects of various technologies to say, "Hey, is this working? Is this something that we think is showing promise to help best integrate the growing renewable energy that's available in our market and points beyond?" We no doubt have learned a lot from watching some of the situations that have happened in the region via California or Texas over the last year or two, but we think we're situated in such a great position. We have great leadership, not only at our utility but throughout the state. We think that we've got a real opportunity with the growth of renewable energy to do it right, to do it well, to make it something that is a meaningful pillar of our energy portfolio going forward.

Jason Price: 

I don't want to let go of the goals discussion just yet. I'm going to have a follow-up. The goal set out by APS raised the bar across the utility sector. What have other utilities said to you about this high expectation? Why so high? Greg, are you setting yourself up for a day of reckoning?

Greg Bernosky: 

We know we can do this and that we should do this. Frankly, it's good business. We have, as I mentioned, a real starting point that we're building from that is real, tangible. It's something that we know we can grow where we are now, from the clean energy portfolio we have, into that complete clean energy of the future. This is about economic growth, jobs, innovation, frankly, helping to transform and play our part in a clean economy. We really look at this as not just how high can we set a bar and what does that look like relative to another utility, or how does that bumper sticker look next to someone else's bumper sticker. The reality is this is a good move for our customers, for our business. It's what people expect. We know we will get there when we lean into it when we have a goal like this to set.

Greg Bernosky: 

I guess to your question, that's one thing that I've heard folks say back to us, is that they know that without a goal like the type of we've announced, their companies won't get there because it takes something like that to really rally and identify and create an identity for what you're doing, how your employees engage with this, and where others that are watching you have a better feel for what they should expect. It really has been met very positively, and something that, I think, from an underestimating perspective, really has been a rallying point for our employees to say, "We stand for this." We believe that this is something that we can provide and deliver to our customers into Arizona. To get back to your question, the day of reckoning, isn't there a day of reckoning if we don't do this that may be, potentially, far worse.

Matt Chester: 

Greg, just like Jason asked earlier, it does come down to the accountability aspect of it. I'm curious. In this type of benchmark-setting, sometimes there's maybe not the criticism, but people make the point that the ones who are making the commitments today are unlikely to be the ones in charge in 20 to 30 years. Do you anticipate that you'll be doing regular checkpoints and adjustments to the commitments as you see how reality comes to align with those goals?

Greg Bernosky: 

Of course, everybody, every business is paying attention to the dynamics in which it operates. What's happening in the market? What are the drivers? What are new indicators that require attention? It doesn't change the endpoint that we're seeking to achieve. We've set up interim milestones with the certain expectation that people will want to know how are you doing. That's why our 2030 goal of 65% clean energy is a material expansion for where we are now. That basically means we need to triple the amount of renewable energy that we had in our portfolio, which was already a significant portfolio, in 10 years. That was an accountability we wanted, not only to demonstrate to others but to ourselves, to help guide our procurement decisions as we put together integrated resource plans, and we work with stakeholders to design requests for proposals and what our needs are. It really is an accountability that we can point back to and say, "This is how we have to walk this path to get where we want to go."

Jason Price: 

Greg, can you share with our listeners some details of the financing behind the clean energy push. I know you passed your first green bond in 2020. Do you have further programs like this plan?

Greg Bernosky: 

Yeah, we were really excited about the green bond. It was $400 million of a 30-year debt issued in September of last year. It was a first of our kind in green bond. The distinction there was to apply proceeds to green expenditures and report on those investments of the bondholders. Those expenditures are for investments like you would expect, renewables, energy storage, efficiency programs, climate change, adaptation, EV infrastructure. We have for some time had some very unique and productive ways to finance, be it utility-owned or third-party-owned renewable projects. We've been very efficient in getting projects to scale and commercialized. We have realized for customers and our investors some real opportunities in our utility ownership. That's actually spanned from utility-scale to behind-the-meter technologies. We have a very unique set of APS-owned assets that have been really unique deployments, particularly in solar energy that we're very proud of.

Jason Price: 

Let's talk a bit further about the different sources of energy, clean energy generation. Your goals include solar and wind that the public is mostly aware of, but it sounds like you're implementing other types of energy sources. What are those, and how do you approach properly funding and implementing these various de-carb tools simultaneously?

Greg Bernosky: 

I think we look at our resource need and mix as an all-of-the-above solution. We have invested and seen great progress, as I mentioned, in renewables and specifically solar over the last five to 10 years in particular. But we have baseload resources, some of which, and significantly of which nuclear generating that is carbon-free. We have short-duration peaking resources. We have intermittent resources that we are, again, pairing up with battery storage to optimize when their availability is. But increasingly, we have and consider customers as part of our resource next. They are doing so many things at their homes and businesses that create efficiencies for themselves that allow us to optimize our system and our needs around their energy consumption and how we are working with them and to really optimize energy usage and, in some cases, when there's surplus energy that we can shift around and move around, working with the customer as a resource in addition to traditional and renewable generation sources.

Greg Bernosky: 

There's some really exciting things to think about when you look at the portfolio of options that a utility like us has. We think it's important, again, to have the right price signals that say, when you talk about the customer as a resource, how do we best optimize around keeping them comfortable serving their energy needs but also, perhaps, signaling ways that which, if consumption occurs during certain hours of the day, we can share savings across the system. If we utilize more energy, for example, low-cost periods today, then we may be able to avoid certain infrastructure and costs and expenses. We think about that a lot, particularly as electric vehicles and electrification begins to scale.

Greg Bernosky: 

We have a significant amount of midday energy that is available increasingly from renewable resources. How can we shift energy consumption to take advantage of those periods of the day and avoid others where we may be paying a premium or needing to add additional resources to serve load in those high-heat, late-day hours. Those are real challenges that the customer can be a part of the solution of. We're really trying to lean into those areas and right size our portfolio with the customer in mind.

Jason Price: 

This has been really insightful. Before we let you go, we're going to put you on your toes with our lightning round. Greg, each response that we're going to ask is followed up with either one word or one phrase answer. Are you ready?

Greg Bernosky: 

Okay.

Jason Price: 

Go-to karaoke song.

Greg Bernosky: 

I avoid karaoke like the plague, but I have a pretty deep voice. I'll admit that Elvira by The Oak Ridge Boys has been known to happen occasionally for me.

Jason Price: 

Do you get your best work done in the morning or in the afternoon?

Greg Bernosky: 

Neither. It's evening or nighttime.

Jason Price: 

Favorite snack at the ballpark or carnival?

Greg Bernosky: 

When I could find funnel cakes, I love funnel cakes.

Jason Price: 

Dogs or cats?

Greg Bernosky: 

Dogs. But I have a new rescue that I would love to either have him have some better habits or, maybe, find someone else who would enjoy his company.

Jason Price: 

Most dreaded chore?

Greg Bernosky: 

My first high school job was hand washing dishes at a restaurant. I'm going to say hand washing dishes.

Jason Price: 

Last, what are you most optimistic about?

Greg Bernosky: 

This may be a strange answer, but I'm really optimistic about the next generation and the talent and the perspectives that they bring. My daughter is getting ready to graduate high school. We've been part of those activities. I'm just so impressed with the perseverance and the mindsets that have and technology capabilities and just how impressive that next generation is coming up here. I look forward to them being in the workforce and being a part of our future together with my generation.

Jason Price: 

Well done. As reward, you've earned the final word. Knowing that many of your utility peers and decision-makers are likely listening, what's the message you want to impart? What's the best piece of advice you have for the industry as a whole moving forward?

Greg Bernosky: 

I touched on it before, but I think it's an all of the above mindset. It's a just-say-yes mindset, and perhaps that we-need-your-help mindset. We are an industry in significant transformation. We provide such a value to customers and to society, but we are in a period of profound change. Each utility is confronting it in new and unique ways. It's different from one area of the country to another. But I think all of us want to have as many tools in the toolbox. We want to have as many folks with us that can help solve for these complicated issues. We, frankly, want to give customers what they want. We want to be able to say yes when they want something from us. I think embracing those mindsets will really help us all going forward.

Jason Price: 

Greg, this has been a terrific conversation. We thank you for sharing your insights into the clean energy transition at APS. We'll definitely be watching the progress toward those goals, and perhaps, we'll have to check back in with you to see how things are going on in a future episode. Thanks again for joining us today.

Greg Bernosky: 

Thank you, Jason and Matt. I really appreciate it, and please, no karaoke.

Jason Price: 

Well, you can always reach Greg through the Energy Central platform, where he welcomes your questions and comments. Once again, I'm your host Jason Price. Plugin and stay fully charged in the discussion by hopping into the community at EnergyCentral.com. See you next time at the Energy Central Power Perspectives Podcast.


About Energy Central Podcasts

As a reminder, the Energy Central Power Perspectives™ Podcast is always looking for the authors of the most insightful articles and the members with most impactful voices within the Energy Central community to invite them to discuss further so we can dive even deeper into these compelling topics. Posting about twice per month, we'll seek to connect with professionals in the utility industry who are engaging in creative or innovative work that will be of interest to their colleagues and peers across the Energy Central community. Some podcasts may be a continuation of thought-provoking posts or discussions started in the community or with an industry leader that is interested in sharing their expertise and doing a deeper dive into hot topics or issues relevant to the industry.

The Energy Central Power Perspectives™ Podcast is hosted by Jason PriceCommunity Ambassador of Energy Central. Jason is a Business Development Executive at West Monroe, working in the East Coast Energy and Utilities Group. Jason is joined in the podcast booth by the producer of the podcast, Matt Chester, who is also the Community Manager of Energy Central and energy analyst/independent consultant in energy policy, markets, and technology.  

If you want to be a guest on a future episode of the Energy Central Power Perspectives™ Podcast, let us know! We’ll be pulling guests from our community members who submit engaging content that gets our community talking, and perhaps that next guest will be you! Likewise, if you see an article submitted by a fellow Energy Central community member that you’d like to see broken down in more detail in a conversation, feel free to send us a note to nominate them.  For more information, contact us at community@energycentral.com. Podcast interviews are free for Expert Members and professionals who work for a utility.  We have package offers available for solution providers and vendors. 

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Thanks once again to the sponsors of this episode of the Energy Central Power Perspectives Podcast: West MonroeEsriAnterix, and ScottMadden

 

See Below for an Exclusive Bonus Clip: Available only on EnergyCentral.com for our Community Members

 

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