COVID-19 Will Change The Shape Of The Electric Utility Industry


After the COVID-19 pandemic, when this ghastly disease has been subdued, we’ll find we haven’t returned to the status quo ante but have moved forward to another place.

The architecture of American life and business will have been redrawn, from how we think about social organization to where and how we live, work and play.

Innovation, America’s strong suit, will change everything and will be the deciding factor in the future of society. Parents may not worry about which school their children will attend but which study pod they can join. Restaurants may advertise their air-scrubbing technology the way they advertised air conditioning when it was newly available.

We’ll do more outdoors, from going to classes to concerts. Architects will be designing ways we can have the virtues of the outdoors and protection from the elements.

All this will particularly affect electric utilities. Already, change is unsettling them. Microgrids, self-generators and the conversion to solar, wind, and new storage systems are changing the old utility model. Hydrogen is sweeping Europe as the preferred storage medium going forward and is gaining momentum in the United States, according to Amsterdam-based Daan Peters of Guidehouse, a global consultancy.

Free-Floating Anxiety

Free-floating anxiety is gripping the nation. As Peggy Noonan wrote in the Wall Street Journal, “People who haven’t worried in years are worried, and it’s not about regular things, it’s about big and essential things. It’s a whole other order of anxiety.”

One of those anxieties is about the electric grid and reliability of supply.

The widespread power outages along the East Coast after Tropical Storm Isaias demonstrated how far utilities still need to go to ensure resilience. I asked Consolidated Edison Company of New York, Inc. President Tim Cawley (NYSE: ED) about the resilience gap, he acknowledged it but also pointed to the huge sums of money they’d spent on improving and hardening lines, vegetation control, and new equipment. Nationwide utilities are all investing in hardening, but ratepayers still reach for flashlights and fill water buckets when they hear a storm is gathering. They worry, too, when they read about the marauding of cyberattackers.

A plethora of players from outside of the industry’s traditional supply chains, is offering innovative solutions.

Morgan O’Brien, executive chairman of Anterix, is one of those innovators looking to help secure the future grid by offering utilities private communications, independent of other systems, on the 900 MHz band it owns.

When O’Brien talks innovation, I listen. He’s a man with a track record: He was a cofounder of Nextel Communications, Inc. (and look at where that led).

O’Brien is convinced that secure private broadband is an answer for utilities, and Anterix (NASDAQ

NDAQ
: ATEX) now holds the majority of the spectrum in the 900 MHz band.

Here’s what he told me, “Today’s utilities face mounting challenges to monitor and control huge, far-flung facilities; often the need to collect information and respond must be measured in milliseconds.

“A lineman’s life or a wildfire sparked by a fallen line may be at stake. The flow of digitized information relies on broadband wireless technology which has the capacity to handle the data flow and the response times that systems require.”

Others are also seeking a place in the resiliency space. These include companies selling storage from utility-scale batteries to those offering security to businesses and homeowners with small, local generators running on natural or LP gas.

‘Massive Change’

Aaron Jagdfeld, CEO of Generac Holdings, Inc., (NYSE: GNRC) told CNBC, “We think there is a massive change coming real soon in the grid. You’re going to see a lot more decentralized, on-site power generation.” He added that this will be the scenario especially as battery storage improves. Generac is a Waukesha, Wisconsin-based manufacturer of small generator sets.

Batteries, and even the old standby pump storage — still the most efficient way to store electricity — have a limit: their drawdown time. Long periods when the wind doesn’t blow or those of persistent cold and cloudy weather still present a challenge. Europe’s answer is vast offshore wind farms that make hydrogen in off-peak hours.

The United States has taken tentative steps. Hydrogen isn’t natural gas; it requires different handling and combustion techniques as its energy content is about a third of that of natural gas.

These are just some of the innovations which will change the future utility. Others are emerging. But the race is on, fueled by the growing consensus that cities will get “smarter.” These cities with their massive interconnectivity, electrified transportation, public and private, will drive utilities to innovate to ensure resiliency against both natural and man-made disasters.

A smart city that loses electricity is pretty dumb.



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