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TRANSCRIPT
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Energy Industry
Update—Don’t
Stop Believin’A Special Edition for the Utility
Supply Chain Conference
January 21, 2019
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Efficient Electrification
The Electric Industry Sees a Growth
Opportunity
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
What Is Electrification?
2
Efficient Electrification
Efficient Electrification: Electrifying the end use of energy—where it is more
efficient to do so—for the benefit of customers, the environment, and society. –
Electric Power Research Institute
Electrification: The process of switching from the combustion of non-electricity
based fuel (i.e., natural gas or propane) to electricity to provide a comparable
service
▪ Light-duty
vehicles
▪ Transit/school
buses
▪ Heavy-duty trucks
Transportation
▪ Variable refrigerant
flow heat pumps
▪ Variable-capacity
rooftop heat pumps
▪ Heat pump water
heaters
Commercial
▪ Air-source and
ground-source
heat pumps
▪ Variable-capacity
ducted heat
pumps
Residential
▪ Infrared curing and
drying
▪ UV curing
▪ Induction surface
treatment
▪ Induction furnaces
Industrial
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
Gas Utilities
Electrification Stakeholder Groups
3
Efficient Electrification
Electric Utilities
End Users Local
Governments
▪ Growth in electric load
▪ Decrease in GHG
emissions
▪ Decrease in local air
pollution
▪ Decrease in natural gas
consumption
▪ Low-cost clean energy
Expected Outcomes
Environmental
Groups
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
Electrification Futures
Study: Scenarios of
Electric Technology
Adoption and Power
Consumption for the
United States
U.S. National
Electrification
Assessment
Recent Electrification Studies
4
Efficient Electrification
Implications of Policy-
Driven Residential
Electrification
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
Industrial
31 Quads Total
10 Quads Electricity
Residential
21 Quads Total
14 Quads Electricity
Commercial
18 Quads Total
14 Quads Electricity
Electrification Opportunities by Sector
The electrification of the transportation sector is widely seen as
having the largest potential increase in electricity usage.
5
Efficient Electrification
Transportation
28 Quads Total
0 Quads Electricity
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
Drivers/Enablers of Electric Vehicle Growth
6
Efficient Electrification
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U.S. Electric PEV Forecast
The United States hit a total of one million PEVs in October 2018.
7
Efficient Electrification
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
Electric Grid Impacts
8
Efficient Electrification
Load Factor Estimates for NREL
Electrification Scenarios
(2017 to 2050)
Lo
ad
Fa
cto
r
YearSource: NREL
Sources: EIA, Argonne Nat’l LabYear
GW
h
PEV Consumption (GWh)
(2017 Actual and 2020–2030
Projected)
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
Load Growth through Transportation Electrification
9
Efficient Electrification
Reference Scenario Projections for U.S. Electricity Demand
3.5 Quads
Source: EPRI
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
Key Takeaways
Efficient Electrification:
The Electric Industry Sees a Growth Opportunity
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Electrification
1
2
3Grid investment may be needed to support
significant growth of PEVs
Transportation has the highest potential for
electrification
Electrification may provide significant load
growth
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Gas and Power Infrastructure
Development
Challenges and Opportunities
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
DRIVING FACTORS
Tailwinds Abating
12
Infrastructure Development
RESTRAINING FACTORS
Reliability Needs
Increasing Renewables
Convergence of
Electric and Gas
Infrastructure
Retirements
Grass Roots
Opposition
Lower ROEs
Competition for
Capital Pipeline
Contracting Rules
Jurisdictional
Challenges and
Uncertainty
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
Power Transmission Investment – Current Status
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Infrastructure Development
Completed U.S.
Transmission Projects
by Year
(2009–2017)
(in Line Miles)
Construction Expenditures
for Transmission by
Investor-Owned Utilities
(2009–2016) (Real 2016$B)
Source: S&P Global Market Intelligence; ScottMadden analysis
Source: EEI
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
Marcellus and Utica Shale Production
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Infrastructure Development
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20
40
60
80
100
120
140
160
180
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2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Natural gas (Mcf/d) Production per Rig Appalachia Region Rig Count
Rig
Co
un
t
Pro
du
cti
on
per
Rig
(MC
F/d
ay)
Source: EIA
0
5
10
15
20
25
30
35
40
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Marcellus (PA, WV, OH, NY) Utica (OH, PA, WV) Permian (TX & NM)
Pro
du
cti
on
(B
CF
/day)
Source: EIA
Appalachia Region Rig
Count and Rig Production
(Aug. 2009–Aug. 2018)
Dry Shale Gas
Production
(Sept. 2009–Sept. 2018)
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
Introduction to Gas Pipelines
15
Infrastructure Development
U.S. Gas Pipeline Development Projects
(by Expected Year in Service)
Source: S&P Global Market IntelligenceSource: S&P Global Market Intelligence
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
Gas Pipeline
Electric Transmission
Infrastructure Projects
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Infrastructure Development
“…a new antiestablishment movement …has energized a new generation to
stand in front of the bulldozers and coal trucks.” – Scott Parkin of the Rainforest
Action Committee
** Project Cancelled **
Northern Pass
$1.6B
** Project Delayed **
Grain Belt Express
$2.3B
** In Development**
PennEast
$1B
** Project Delayed **
Mountain Valley
$4.6M
** Project Delayed **
Atlantic Coast
$6B to $6.5B
** In Service **
Atlantic Sunrise
$3M
** In Service **
Sabal Trail
$3.2B
** In Development**
Northern New England
Clean Energy Connect
$950M
** Under Construction **
Great Northern
$558M to $710M
** Under Construction **
Big Stone South to
Ellendale
$290M to $340M
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
Early Generation Retirements
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Infrastructure Development
NERC Generation Retirement
Scenario
“Ensuring reliability throughout a
significant retirement transition will
likely include construction of new
transmission and fuel
infrastructure.” – NERC
Findings
▪ On a regional scale, significant
replacement reserves are needed,
requiring expedited queues
▪ Gas is expected to be the
predominant replacement resource
▪ Large amounts of retirements may
result in extensive transmission
network upgrade requirements
Location of Thermal Violations in
Studied Case Summer 2022
Source: NERC
500 kV
345 kV
230 kV
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
North America Poised to Lead
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Infrastructure Development
Actual and Forecast LNG Exports by
Region (BCF/Day)
Source: BP
Cumulative Capacity Additions
2017 2019 2023
2.7
BCF/day
7.1
BCF/day
11
BCF/day
Additional 16 facilities totaling
27.3 BCF/day pending approval
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
Key Takeaways
Infrastructure Development: Challenges and Opportunities
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Infrastructure Development
1
2
3Coal and nuclear retirements will drive
transmission investment
Challenges to siting and permitting will
continue
Infrastructure continues to move ahead but at a
slower pace
US LNG exports will require new facilities and
pipeline capacity 4
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Grid Modernization
States and Utilities Test the Waters
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
What Is Grid Modernization?
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Grid Modernization
Grid Modernization: Investments—some of which may be considered foundational
and/or DSP-enabling—that improve the reliability, resiliency, efficiency, and
automation of the T&D system. Such investments can include the sensors, data,
and communications networks that enable enhanced visibility and understanding of
the behavior of the network; technologies and equipment that facilitate greater
customer engagement regarding energy usage and alternatives; and the
underlying systems, data management and analytics that facilitate situational
awareness, asset management, contingency and risk analysis, outage management
and restoration. These necessary core investments underpin the required focus on
grid reliability and resiliency. They provide the basis for increased operational
flexibility, can enable efforts toward achieving state policy goals, such as the
integration of various types of DER, and are beneficial for any resource mix.
– New York Joint Utilities
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
Grid Modernization Drivers
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Grid Modernization
DER
Penetration
Aging
InfrastructurePolicy Drivers
Customer
ExpectationsTechnology
Advances
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
Grid Modernization Technologies
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Grid Modernization
Tools and
Analytics
Advanced technologies, including
big data analytics, to enhance decision
making and/or real-time operations
Communicating sensors and switches that can operate autonomously or through centralized
control systems
Distribution
Automation
Grid Edge
Sensing
Sensors and other smart devices that provide enhanced
visibility and situational awareness
Flexible
Resources
Resources or management systems
that enable the use of a more diverse and distributed mix of supply or services
Foundational
Systems and
Infrastructure
IT and OT systems and equipment necessary to enable current and future capabilities
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
Latest News
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Grid Modernization
Q3 2018 Legislative and Regulatory Action on Grid Modernization
Source: N.C. Clean Energy Technology Center
276 Total
Actions in
Q3 2018
Massachusetts
$220M, 3 years
Duke Energy
$2.5B, 4 yearsSCE
$1.3B, 2019–2020
PSE&G NJ
$4B
$3.2B, (EIMA) 2011
ComEd
$1.4B, 2019–2021
Ameren
$1B, 5 years
AEP
$12.8B, 3 years
and
First Energy
$500M
Published grid
mod report
FP&L
$3B, past 10 years
PNM
AMI Rejected
ConEd
$1.5B, AMI
Hawaiian Electric
$86M, 2019–2023
Dominion
$800M, 2019–2021
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
Paying for Investments
25
Grid Modernization
Rate Cases Grid Modernization
RidersLegislative Action
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Copyright © 2019 by ScottMadden, Inc. All rights reserved.
Key Takeaways
Grid Modernization: States and Utilities Test the Waters
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Grid Modernization
1
2
3 Regulatory treatment and rate impacts matter
Grid modernization is not just happening in NY
and CA; it’s all over the United States
A confluence of factors are driving grid
modernization programs
The anticipated spend is significant4
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Cristin Lyons
Partner and Energy Practice
Leader
Cristin Lyons
Partner and Energy Practice Leader
ScottMadden, Inc.
2626 Glenwood Avenue
Suite 480
Raleigh, NC 27608
O: 919-781-4191 M: 919-247-1031
www.scottmadden.com
mailto:[email protected]://www.scottmadden.com/