Full Title: 2015 Strategic Directions: U.S. Electric Industry Report
Author(s): Black & Veatch Insights Group
Publisher(s): Black & Veatch Insights Group
Publication Date: 08/2015
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Disruptive forces predicted by electric industry pundits have arrived and are redrawing the power supply and consumption chains in the United States and abroad. New technologies affecting both sides of the meter clash with a regulatory construct struggling to keep pace with rapid innovation. Utilities must maintain generation capacity and transmission networks to safely deliver reliable electricity, even as residential consumers avail themselves of cost protections and new methods of generating, conserving and, in some cases, selling power back to the grid.
For the past two years, the Black & Veatch Strategic Directions: U.S. Electric Industry report has eyed the disruptive capability of distributed generation (DG), renewables, consumer technology and emerging investment practices on the industry’s traditional business model. In 2015, our report sees these forces actively challenging utilities and altering their strategies for maintaining reliability, resilience and shareholder return. These challenges are increasing even as familiar issues pressure the generation sector. This year’s report finds aging infrastructure, a perennial issue, gaining renewed prominence as utilities’ most important challenge (Figure 1).
The numbers underscore the value of, and need for, aggressive asset management programs, in which utilities actively assess the age and condition of their equipment, evaluate the risks of repair or replacement, and plan for replacements and upgrades long before system shocks occur.
Assets, comprising a utility’s financial resources as well as its physical facilities, must be monitored, assessed and managed to ensure the level of service customers expect. Utilities understand the peril of waiting on equipment to fail. A recent forecast by the Edison Electric Institute predicts that investor-owned utilities will spend nearly $60 billion through 2017 on grid modernization and reliability, new transmission lines and substations and other improvements