State of the Energy Industry: A Mid-Year Review

(or “I Feel the Earth Move under My Feet” – with apologies to Carole King)

Get The Latest Edition of the Energy Industry Update

ScottMadden recently joined forces with Energy Central to present an interactive webinar, “State of the Energy Industry: A Mid-Year Review.” This session, moderated by Stuart Pearman, partner and energy practice leader at ScottMadden, was based on ScottMadden’s latest Energy Industry Update, a semi-annual publication featuring our view of recent significant events and emerging trends that is received by more than 10,000 industry leaders.

During this 60-minute webcast, panelists John Pang, partner; Todd Williams, partner and fossil practice co-leader; and Cristin Lyons, partner and transmission, distribution, and Smart Grid practice leader, shared their views on renewables, fossil generation, and transmission, and fielded questions from the audience. Additionally, all registered attendees received an exclusive sneak peak of our EIU summer 2014 edition before it was released to the public.

If you were unable to participate in the live session, the webcast deck is shown below and available for download above.

View Accessible Version

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Link to: http://www.scottmadden.com/insight/773/the-scottmadden-energy-industry-update-summer-2014.html

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Diagram of Key Waste Streams

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State of the Energy Industry: A Mid-Year Review


  • (or “I Feel the Earth Move under My Feet” – with apologies to Carole King)
  • August 22, 2014

Todays Agenda and Your Presenters


1

  • Welcome and Introduction
  • Transmission In a New York State of Mind: The Empire States Reforming the Energy Vision Initiative Competitive Transmission: Why Is This So Hard? Latest in Regional Competitive Processes under Order 1000
  • Fossil-Fired Generation Where Are We Headed and Whats Happening Now? Ninth Inning for Some Units and the Perfect Storm Persists Proposed GHG Standards A Nail in the Coffin? Water and Energy A Persistent Concern
  • Renewables Renewables Development: More Steel (and Modules) in the Ground, But Policy Uncertainty Remains a Barrier A Maturity Model Emerges for Renewable Energy
  • Stuart Pearman Partner and Energy Practice Leader
  • Cristin Lyons Partner and Transmission, Distribution, and Smart Grid Practice Leader
  • Todd Williams Partner and Fossil Generation Practice Leader
  • John Pang Partner
  • Greg Litra Partner and Energy, Clean Tech, and Sustainability Research Leader
  • Questions and Answers

Introduction


  • Stuart Pearman Partner and Energy Practice Leader Stuart Pearman is a partner with ScottMadden and leads the firms energy practice. As a management consultant for 19 years and a partner for 13, he has performed more than 170 projects for more than 50 clients. Stuart has expertise in energy utilities, related businesses, and several other industries. He is also a seasoned practitioner, with experience in both line and staff management roles. Stuart earned a B.A. in psychology from Williams College and an M.B.A. from the University of North Carolina Kenan-Flagler Business School, where he won the Best Industry Analysis Award and graduated at the top of his class. In addition to his full-time work at ScottMadden, Stuart is an adjunct assistant professor at Kenan-Flagler, teaching consulting and leadership.

Transmission


  • Cristin Lyons Partner and Transmission, Distribution, and Smart Grid Practice Leader Cristin Lyons is a partner with ScottMadden and leads the firms transmission, distribution, and Smart Grid practice. She joined the firm in 1999 and has since consulted with myriad clients on issues ranging from merger integration to process and organizational redesign to project and program management. She is also a frequent speaker and panelist at conferences across the country. A graduate of the Cox School of Business at Southern Methodist University, Cristin earned a B.A. in political science and Spanish from Gettysburg College and is a member of Phi Beta Kappa.


  • In a New York State of Mind: The Empire States Reforming the Energy Vision Initiative
  • NYPSCs Policy Goals: Enhanced customer knowledge and tools that support effective management of their total energy bill Market animation and leverage of ratepayer contributions System-wide efficiency Fuel and resource diversity System reliability and resiliency Reduction of carbon emissions
  • Notes: *See EPRIs Integrated Grid Vision, at p. 19 of The ScottMaden Energy Industry Update Sources: Reforming the Energy Vision, Case 14-M-101; REV Collaborative Meeting presentations
  • On April 25, 2014, the New York Public Service Commission (NYPSC) commenced its Reforming the Energy Vision (REV) initiative. The public proceeding aims to align electric utility practices and our regulatory paradigm with technological advances in information management and power generation and distribution The order included a staff report challenging two traditional assumptions: (1) demand is inelastic and (2) economies of scale make centralized generation and bulk transmission invariably cost effective An NYPSC Staff report details a new business model in which the distribution utility initially functions as a Distributed System Platform Provider (DSPP); other stakeholders may serve in that role at a later time The proposed role of the DSPP is to actively coordinate distributed energy resources (DER) and provide a market in which customers can optimize their priorities while receiving compensation for providing system benefits The proposed model would address many of the operational, technical, and financial challenges cited in the EPRI concept paper* Utility-specific implementation plans are expected to follow stakeholder work groups evaluating energy reforms in two parallel tracks (see table below)


  • In a New York State of Mind (Contd): The Empire States Reforming the Energy Vision Initiative
  • Is this the revolution? Under the DSPP model, the distribution utility would expand its functions from primarily being a physical conduit for delivery of electricity to being a transactional platform for the distribution-level market. The anticipated responsibilities of DSPP include: Plan traditional utility investments relating to transmission and distribution (T&D) assets Plan customer-sited generation and demand response resources Manage DER products and services in real time Monetize value of DER products Serve as the local balancing authority, forecasting load and dispatching resources in real time to meet customer needs and maintain reliability What is it worth? Value of benefits (see table at right) are expected to be influenced by location, resource, time of day, resource variability, predictability and visibility, price, and other factors Keeping up with the Joneses. The Massachusetts Department of Public Utilities issued grid modernization orders in June 2014. This plan focuses on combining real-time two-way communication from advanced meters with time-variable pricing. While both states emphasize technology platforms and customer engagement, New Yorks effort is more ambitious as it recasts stakeholder responsibilities What could possibly go wrong? Success will require significant infrastructure investment, diverse and autonomous utilities adopting a single business model, customer participation in a new and complex market, and alignment with other policy initiatives (i.e., NY Energy Plan and NY Energy Highway)
  • Sources: REV, Case 14-M-101; REV Collaborative Meeting presentations; MA Order 12-76-B; MA Order 14-04-B; industry news


  • Competitive Transmission: Why Is This So Hard?
  • Order 1000 is introducing competition to the transmission portion of the electrical grid and substantially changes the landscape for transmission development RTOs will have to manage open, transparent processes by which qualified bidders compete to build projects Transmission owners and developers will have to compete to build new transmission
  • The RTOs are developing by which various entities will compete to build transmission The entities proposing to plan and build the transmission system are now a very mixed group The RTOs have set very different thresholds for competitive projects; rules are evolving differently across the country As the RTOs are stakeholder driven, there is significant work to incorporate the perspectives of increasingly diverse stakeholders States have responded in dramatically different ways. Some have put in place their own ROFRs, and others are welcoming competition According to FERC, states ROFRs need to be considered in the RTO planning processes All of the potential competitors have to learn how to manage the new environment Incumbent utilities have to build new competencies to compete with new entrants. Internal organizational structures, governance, and affiliate rules can all stymie the development of necessary competencies New entrants have to learn the grid to compete against the incumbents; transmission planning capabilities will be key All parties have to learn the new rules of the road
  • Notes: Projects in states with state ROFR can be considered earlier in the regional-planning process instead of at the evaluation stage per FERC Order on Rehearing and Compliance issued May 15, 2014, in dockets ER13-198, ER13-195, ER13-90; all public policy projects must be competition-eligible Sources: SNL Financial; Gibson Dunn; Brattle Group; regional compliance filings


  • Latest in Regional Competitive Processes under Order 1000
  • Projects Eligible
  • Recent Developments
  • Notes: Projects in states with state ROFR can be considered earlier in the regional-planning process instead of at the evaluation stage per FERC Order on Rehearing and Compliance issued May 15, 2014, in dockets ER13-198, ER13-195, ER13-90; all public policy projects must be competition-eligible. NYTOs means New York transmission owners Sources: SNL Financial; Gibson Dunn; Brattle Group; regional compliance filings

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