Watch: Coronavirus Conversations - How the Electric Power Sector is Weathering the Pandemic
Posted On:Wednesday, Jul 01, 2020 - 3:15 pm
The electric power sector faced major operational challenges in the first months of the coronavirus pandemic. On June 1, 2020, executives from Duke Energy and Constellation joined Duke University experts to discuss how the electric power sector is weathering these challenges—and what the impact might be for the energy transition. Sarah Rispin Sedlak (Duke Initiative for Science & Society) moderated the conversation, which was co-organized by Science & Society, Duke’s Nicholas Institute for Environmental Policy Solutions, and the Duke University Energy Initiative.
On operational challenges under lockdown conditions
Bryan Walsh, Vice President for Central Services and Organizational Effectiveness, Fossil-Hydro Operations, Duke Energy
“One of the things that really became that driving north star, as we created a pandemic plan, was to really look at [questions like], how do you ensure your personnel on site are safe? How do you ensure your environmental obligations are maintained continuously? How do you maintain essential operations and services with no disruption to our customers? And how do you work to limit the pandemic spread to our employees or contractors … and also our customers?”
“To limit the amount of outside traffic at our sites, we deferred numerous outages to the fall. Springtime is outage season—essentially, you do a tune-up of your plants, do the maintenance you need to get ready for your summer run. We got to the point where we deferred anything that we did not think had a material reliability impact for our customers to the fall … We might have a few nuisance reliability issues because we deferred some of this maintenance, but we thought the risk of that outweighed the risk if we brought folks onsite from out of town that wound up introducing the virus at our locations.
So then we got to the point of saying, What are the most important sites that need work … the ones that are at the point in the maintenance cycle where we can’t delay any longer? In Indiana, we created an outage plan that we reviewed with the local health department and government officials in the area. I think officials were excited that people will be utilizing the hospitality industry in their area, but they wanted to know that we had good controls in place so that we would not present a problem to their local community.”
Michael D. Smith, Senior Vice President for Distributed Energy, Constellation
“We’ve basically not missed a beat [in construction of renewable energy projects]. We’ve had some delays here and there; we’ve had some places where we’ve had to be innovative and creative in terms of ‘how’s it going to work?’ But we’ve been able to continue to construct and operate and service these assets for our customers, for the most part, throughout this experience. Where we’ve found a slow-down is in the origination of new projects, and that’s not because customers are less interested in the benefits of solar or energy efficiency or having a third party operate their assets, but rather because of access to customers and access to decision-makers. And even now, a few months into [the pandemic], we’re starting to find that customers are getting back to work, and as they get back they start to focus on these things.”
On how the pandemic has changed demand for electric power, and possible implications for the longer-term energy transition
“We have seen an increase in residential use, while [commercial and industrial use] is down. One of the things we’ve noted is that the peaks—the morning and afternoon—are being dampened, and the load curves during the course of the day are flatter … We’re hopeful that we start coming back to the pre-COVID-19 levels toward the end of this year or beginning of next year, but we fully recognize that some businesses may not survive, so we’ve done a bunch of modeling to try to account for all the [possible] cases.”
Jennifer Chen, Senior Counsel, Federal Energy Policy, Nicholas Institute for Environmental Policy Solutions
“[Demand response programs] historically have not seen a lot of residential uptake. But people paying more for electricity at home … might be [more ] interested in seeing how they can smartly and efficiently manage their energy use.”
Michael D. Smith
“Since [the financial crisis of 2008], there have been three main drivers keeping demand flat-to-declining over time: changing weather patterns; the driving of energy efficiency and onsite generation into the energy economy; and the third one, the big wild card, is consumer behavior. During this last 10-12 years, customers have gotten smarter—both in the residential and the commercial space—and not only are they implementing energy efficiency measures, but they’re also changing the way they behave in the workplace and in the home. To my eye, that’s what the permanent change post-COVID is going to be.
… More and more people will continue to deploy energy efficiency and onsite generation because it makes economic sense, but we don’t yet know the extent to which people are going to return to a traditional working environment, and how that’s going to impact commuting patterns, use of mass transit, use of electrified mass transit, and also the demand in our factories and offices. If I had to guess, I’d say this trend of macro, flat-to-declining demand will continue post-COVID. It remains to be seen, but I think that’s where the smart money is, and the question for the energy industry is how do we adapt our distribution networks—our supply—to that changing demand reality. That will be the big challenge for us.”
On planning for resiliency in the future
Michael D. Smith
“I think the trend of customers seeking more resilient sources of energy and more self determination is going to continue. The economics are there … customers will continue to seek and pay for that, because they see the long term benefit of going in that direction. Certainly, as you think about those changes out at the ends of the distribution systems, customers are effectively taking more and more load off the grid.”
“A lot of these central generating stations can operate at 100% capacity factor, but a lot of the renewable or distributed [sources] can't reliably operate at that level constantly. So this is something that we're actually looking very closely at, for our facilities, the central generation on unit flexibility. How much can you get the units to turn down? How quickly can you get them to turn down? Because the reality is that we fully support and agree that there has to be more renewables and we're trying to get into that game even more and more with more and more regulated solar.
… If you ask me, the biggest challenge for central generation over the next 10 years is, as more and more distributed generation more and more renewables are out there, how we can make sure that the reliable constant electricity that everybody enjoys, is maintained. And that, for our part means that we have to have more unit flexibility.”
“[We should also consider] the ability for the transmission and distribution network to provide flexibility. … For example, … the Western Energy Imbalance Market operated by the California Independent System Operator … releases … wind resources that are in negative pricing zones to … customers that are outside of [those] utility footprints. … It's been a win-win for lowering carbon emissions and getting low-price electricity to customers.”
”Some customers would like a high degree of reliability and some customers really would like to save money through demand response programs. Historically, we've built out the grid to meet a certain reliability standard, but we haven't really justified that reliability standard based off of what customers want … Getting a sense of how customers value reliability [could help] enable customers with the technologies available today to choose the level of reliability they want.”
What the Federal Energy Regulatory Commission (FERC) and other government entities should be focused on right now
Michael D. Smith
“Properly incentivizing the deployment of distributed energy resources, particularly storage, in a way that's sensitive to central station generation and all the pricing issues we have there—but also allowing these resources to be deployed and recognized and used by the grid operation teams.”
“Our company, along with many other utilities, is … trying to be a leader in becoming greener ... One of the biggest hurdles that we have is that we also need to have our states come along and provide the right regulatory construct to allow us to be able to do this.”
“FERC can … ensure that resources like storage, … energy efficiency, demand response, and renewables can participate equally in the market on a level playing field. … These resources are important for a clean energy transition, but also … can play an important role in the potential new normal that we'll see as [some] customers stay at home and work from home.”