The Need for a Holistic Electrification Strategy

Jan 16, 2019

Electrification has been coming up constantly in our industry over the past couple of years. As far as what electrification is—my colleague Jeff Baker recently wrote a great blog on the subject, Electrification and the Utility of the Future. But, is it genuinely gaining momentum and does it have a role to play in America’s energy future? Based on attendance at EPRI’s conference on electrification in Long Beach, CA this past August, I can tell you for certain—electrification has a role in our energy future, although it is still in a very formative stage.

The sheer interest in this topic is pretty incredible. Over 1,700 attendees crowded the Long Beach Convention Center to listen to several days of diverse presentations and walk through a massive, sold-out expo hall. I was really struck by the scale and number of utilities (both electric and dual-fuel) exhibiting and demonstrating their support for electrification, and left the conference with two key thoughts:

  1. Electrification offers utilities and their constituents a whole host of potential benefits, including greenhouse gas reduction, distribution optimization, load smoothing, new revenue streams, and potentially lower energy bills for end users.
  2. If we approach electrification initiatives in a piecemeal fashion, rather than as a holistic, integrated strategy, we're likely to end up with a hot mess.

Electrification encompasses a broad number of topics and initiatives (see graphic below), but there does not seem to be a dominant, common framework that utilities and their regulators are following to maximize the value of each of these somewhat siloed initiatives.

electrification types for holistic approach

The fact that many of the efforts to study and influence electrification initiatives is dealt with in a disparate manner isn’t surprising. Utilities face multiple challenges when approaching electrification efforts:

  • Most utilities do not have a comprehensive electrification strategy, and multiple departments are pursuing initiatives in alignment with their established priorities.
  • Regulatory environments, funding mechanisms, and rate structures are based on supplying reliable power to a meter.  Few mechanisms currently exist to address the increasingly diverse set of services and infrastructure customers are demanding from utilities.

Electrification efforts require an unprecedented degree of coordination with technology/equipment providers, customers, and regulatory stakeholders. Ensuring investment in electrification is prudent and in ratepayers' best interest will take time to evaluate.

Nexant has been working with several leading utilities to evaluate and advise on electrification efforts. 

We’re talking with utilities about developing strategic electrification plans. This work focuses first on getting a complete understanding of the utility’s electrification goals. We then assess the market to understand the potential for the utility to influence the identified areas of opportunity, develop and test strategies for achieving this potential, and coordinate with the utility’s distribution planning team, so that an end-user’s actions and investments become a positive contribution to the grid.

Here are three examples of our work that include electrification:

  • In Arizona, we provide turnkey program implementation services for Salt River Project's Business Solutions Workplace Electric Vehicle Charger rebate program. Our services include program outreach, customer service/call center support, and application and rebate processing. The program is designed to motivate the installation of Level 2 EV chargers in the workplace by providing both financial incentives and advisory support. In Nexant's first year overseeing the program, we exceeded the program goal of 50 units rebated, issuing a total of 85 rebates. In the current program year, Nexant is on track to meet an increased goal of 200 units rebated with a current pipeline of 168 units with more than 4 months left in the program year.
  • For San Diego Gas & Electric (SDG&E), we evaluated an EV Time-of-Use (TOU) pilot program. We recommend utilities include TOU planning as part of their comprehensive strategy because the timing of when customers charge their EV at home can have major implications on distribution system planning, operations, and system capacity needs. In our evaluation we found that participants exhibited learning behavior and responded to price signals and changes in on-peak and off-peak prices. TOU prices in conjunction with charging timers for the EVs resulted in the vast majority of customers charging in off-peak times (overnight and early morning). 
  • Our Strategy & Planning group has also published works on EV forecasting for IEEE in the past. Utilities should consider using a conjoint study and existing market penetration data to inform electrification forecasts and how incentives will affect implementation. 

We want to give a shout out to one utility that is off to an impressive start to strategic electrification planning—Southern California Edison (SCE). SCE is making unparalleled investments in electric vehicles and building electrification. At the same time, they’re trying to transform the way in which customer programs are funded and in which program benefits are accounted for. Look up their Clean Energy Optimization Pilot—it’s a simple concept, but the results could be transformational.

If you’re considering electrification opportunities for your utility, reach out to me at bsimcox@nexant.com. We would be delighted to help you with your strategic electrification plans.