U.S. electric grid is facing slew of future challenges, and the future of the industry is at stake if these issues aren’t resolved.
These issues probably aren’t what you think: they’re facing an industry-wide shortage of power personnel; from electrical engineers to professors teaching at Universities across the country.
The industry is facing a demographic cliff, with the current average age of the power sector workforce at 50 years old. At the current rate, 52% of skilled engineers and technicians will need to be replaced in the next 10 years. The problem? There is also a lack of new graduate engineers in the US, and a decreasing number of electrial engineers enrolling and graduating from programs.
Even with the challenges facing the industry, there is a major upside. The energy sector presents some of the best careers opportunities out of any industry, with high job growth and demand. In the next 10 years alone it is estimated that there will be a 15% to 20% growth in demand for nuclear and petroleum engineers.
As green and renewable energy continues to grow, so will the job opportunity. President Obama has noted that by 2035, 80% of America’s electricity will come from clean energy sources. With that said, the energy sector will continue to be a hotbed of opportunity for new graduates.
U.S. electric grid is facing slew of future challenges
Smart Grid and Energy Storage Installations Rising WorldwideSmart meters are just one component involved in emerging smart grid networks. Smart meter deployments are increasing, with many nationwide installations planned worldwide. (Source: Wired)
Global investment in smart grid technologies rose 7 percent in 2012 from the previous year. On top of direct investments, numerous countries around the world are making headway on smart grid regulatory policies, development plans, and frameworks to support future grid infrastructure upgrades. Smart grids consist of many different technologies serving different functions. Smart grids are commonly defined as an electricity network that uses digital information and communications technology to improve the efficiency and reliability of electricity transport. Such modernized grids are becoming more important as current grid infrastructure ages and regions begin connecting more variable generation from renewable energy sources into the electricity network.
The United States had the highest investment of all countries in 2012 despite seeing a 19 percent decrease in smart grid spending from 2011. While the U.S. federal government has funded smart grid development and supported deployment projects throughout the country, many individual utilities are contributing their own efforts to update grid infrastructure. At the beginning of 2012, U.S. smart grid development efforts had installed 37 million smart meters, covering 33 percent of American households. Continued efforts by utilities to deploy smart grid solutions will become increasingly important in the U.S. as federal funding initiatives enacted under the American Recovery and Reinvestment Act of 2009 begin to expire.
As investment in the U.S. declined, smart grid investment in China continued to grow. Wide-scale smart grid technology deployment has been included as part of a massive ongoing overhaul of China’s inefficient transmission infrastructure. The country’s investment in smart grid technology accounted for 57 percent of all smart grid investment in Asia, an already very active region for smart grid development that accounted for around 40 percent of global investment, with Japan and South Korea heavily focused on development plans and installations.
The European Union saw lower financial investment than the United States or Asia, but has established smart meter installation mandates in recent years and is funding research and development programs focused on smart grid technologies. Electricity Directive 2009/752/EC requires that by 2020 EU member states deploy smart meters in 80 percent of households where the cost-benefit analyses for installations is positive. Smart grid progress in individual countries in Europe varies at present, with high penetrations of smart meters in some and planned nationwide smart meter rollouts in others.
Energy storage technologies offer their own benefits to the modern electricity grid, but can also act as alternatives to or complements of smart grid infrastructure. The number of energy storage projects worldwide rose 19 percent in 2012. Pumped hydropower still dominates all global energy storage infrastructure, accounting for 98 percent of installed storage capacity globally. However, the location-dependent aspect of pumped hydro and the recognition of the growing need for grid-tied energy storage have put emerging technologies, such as advanced batteries, into sharper focus as well.
Smart grid networks and energy storage technologies are gaining traction in energy sector development plans with larger-scale deployments currently beginning or being planned for the near future. The next few years will see numerous nationwide smart grid deployment projects and advancements in energy storage markets. The success of these developments will surely influence the respective paths of each technology’s development.
Musings on Microgrids
In the wake of Hurricane Sandy, we’ve seen a renewed focus in the media on climate change. As it so often does, the conversation points to technology as a lever for both mitigation and adaptation.
Microgrids in particular are suddenly top of mind again, covered in MIT Technology Review, Fast Company, Christian Science Monitor, and Huffington Post in a span of just five days. These pieces praise microgrids for enabling distributed renewables (mitigation) and taking critical customers like hospitals off the main power grid in emergencies (adaptation).
While we applaud any effort to raise awareness of clean technology, it’s important not to have a knee-jerk response to climate events like Sandy. In the case of microgrids, it’s not what these authors wrote – but rather what they didn’t write – that has us giving a word of caution: the latest reports lay out microgrids’ great technological benefits, but give little advice as to how an institutional or commercial electricity customer should navigate the overwhelmingly complex regulatory structure behind utility operations in order to actually develop and deploy a microgrid.
In many regions of the US, the reality is that it will be up to the utilities and their regulators to determine the extent to which customers can actually build out microgrids, particularly as distributed generation represents a threat to utility revenues from electricity sales.
Understanding that utilities may be best positioned to drive microgrid development, we offer them a few preliminary tips:
- Don’t think about a microgrid purely as a technology; think of it as an enabler of other goals. Just as Zipcar sells “mobility” rather than cars, focus on selling electric reliability and power quality rather than commoditized electrons. What kinds of new business models does this enable?
- Thoroughly assess whether customer needs can be met with existing infrastructural upgrades and other capital improvements available through the rate base, avoiding the need for a customer to make risky microgrid investments in the first place.
- Collaborate with customers to determine the ROI of microgrids by understanding what the costs and benefits of improved reliability and other benefits are to the individual customer versus the collective rate base. How does this change by industry?
Whether microgrids represent a looming decentralization or democratization of electricity delivery in the US is worthy of debate, but regulatory complexity means any change will be very slow in coming. It’s up to utilities to engage customers and regulators to develop business models and ownership models that satisfy everyone’s needs. What kind of innovative models could be developed for microgrids, and which industries can utilities draw from for inspiration?