Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Podcast

How Utilities Actually Think

Rob goes deep on one of the most intriguing — and consequential — questions of the energy transition with Breakthrough Energy’s Alice Yake.

A power line worker.
Heatmap Illustration/Getty Images

How do utilities decide what they want — and need — to build? It’s one of the most important problems driving the data center and clean energy conversations right now. But it’s hard to get a sense of what constraints and ideas actually drive utility decisionmaking from the inside.

Alice Yake is the vice president of GRIDS at Breakthrough Energy, and the former senior vice president of system strategy and chief planning officer at Xcel Energy in Colorado. On this episode of Shift Key, she walks us through a half century of the grid’s biggest decisions — what constraints utilities and planners thought they faced, what choices they made, and what it means for the future. She also discusses Breakthrough’s work to build an open-source grid planning tool and how it could

Shift Key is hosted by Robinson Meyer, the founding executive editor of Heatmap News.

Subscribe to “Shift Key” and find this episode on Apple Podcasts, Spotify, Amazon, or wherever you get your podcasts.

You can also add the show’s RSS feed to your podcast app to follow us directly.

Here is an excerpt from their conversation:

Robinson Meyer: We tell a story about liquified natural gas being ... The U.S. was preparing to import a ton of LNG, correct? That’s why we built a lot of terminals. And then after fracking happened and we were able to access gas and shale, we had to reverse-engineer all of them so that we could export LNG. But of course, we expected all these power plants to fall off the map, too.

Alice Yake: Exactly. And so that’s why we ended up with a system that was overbuilt. And, you know, different stories, people like to demonize — it’s like, the utilities push this. No, it was a national call to action because of this hypothesis around the availability of this type of fuel. And those plants were no longer going to be assets that we could use. So now we end up in this situation where we’re at the tail end of the energy crisis, we’ve overbuilt the system, and we’re investing in efficiency. And so therefore, then we don’t need as much and we’ve overbuilt. So we have a lot of time to grow into this. But prices went up because all that capital had been spent, right? And the prices went up. And so therefore, people started looking at, well, what can we do about this? Well, how do we build a market that makes the prices come down or have people compete? And so a lot of this was happening at the same time. You saw telecom deregulate. You saw other industries — you know, pipeline infrastructure. You know, all of those things were happening. This was the grand idea at that point in time that this was going to save people money.

I would argue it did in some places, it didn’t in others, right? And we’ve learned from that as well. But then it stabilized because how much have people really paid attention to their electric bill in the past 20 years? Not a ton, right? When we have bad storms or there’s some kind of excursion or maybe natural gas prices spiked or something along those, that’s when they were looking at it. I remember coming into the utility sector 15 years ago and one of the comments was, what’s the average amount of time that people spend thinking about their utility? It was 12 minutes a year, 12 minutes a year, one minute a month when they had to pay their bill and whether that was writing a check. And then when it got automated, you know, it was even smaller. It was maybe doing your budgeting every month, one minute a month. So that tells you a lot about how stable it was, right? And also where prices were.

Now you can’t go a day without seeing a headline about rising energy prices and what’s happening. And so moving forward through time, where we got to was, is, we had all this infrastructure. So we really, we didn’t have to be good at building a whole lot anymore. We didn’t build a ton of plants. If you look at the grass or the transmission infrastructure, but we know that we need it. And we also know that it’s aged now because do your math. If you go back, it was built in the 1970s and 80s. We’re now looking at things that are on average, 55 years old with asset lives of around 60 years. So that means you have a lot of things that you have to replace.

It’s not unique to the utility sector or the energy sector either look at our highways look at our water infrastructure this is happening across the board and for those of you that are math nerds and financial out there you go back to the rules of Bondbright which are applied to utilities and straight line depreciation we had a really expensive brand new system like we were talking about in the 80s now we’ve got our 55-year-old gremlin clunker that takes a lot of maintenance investment, but we have to buy a new car. And when you buy a new car, you have to spend the new capital, right? And when you spend that new capital, you start your depreciation over. So right now we have a really old system that’s low cost, but we have to replace a ton of it.

You can find a full transcript of the episode here.

Mentioned:

California Burning, by Katherine Blunt

Jesse’s paper on uncertainty-aware grid planning in the real world

James Bonbright’s landmark work on public utility rates

This episode of Shift Key is sponsored by ...

Lunar Energy is building the technology to turn homes into active participants in the power system. Learn more about Lunar’s vision of the future at lunarenergy.com.

Yellow

You’re out of free articles.

Use code: CWNYC30 to save 30%.
Subscribe to access Heatmap’s exclusive polling and expert analysis of energy, climate change, and sustainability, now just $99/year $69.30/year.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Politics

The Bipartisan Buddies With a Plan to Fix Transmission

With a permitting deal seemingly on the horizon, Republican Gabe Evans and Democrat Scott Peters may be about to see their partnership pay off.

Gabe Evans and Scott Peters.
Heatmap Illustration/Getty Images

The fate of permitting reform legislation that could smooth the way to all kinds of new and improved energy infrastructure — including transmission lines and renewables — is currently hostage to opaque discussions between Senate committee chairs. Rhode Island Senator Sheldon Whitehouse, the Democratic ranking member of the Senate Environment and Public Works Committee, told a Rhode Island business group earlier this week that “we’re actually in a pretty good place on permitting reform,” and that there was “maybe another week of negotiations.” Whitehouse’s Republican counterpart on the EPW committee, West Virginia Senator Shelly Moore-Capito, told Semafor on Friday that any bill has “got to pop out of here in the next 48 hours.”

If that’s going to happen, it will be because Republicans and Democrats have decided it’s worth it to get along. Any deal will eventually have to be voted on by the House, which has already produced several bills on a bipartisan basis, and even passed one — the SPEED Act — late last year.

Keep reading...Show less
Green
Energy

Nuclear Is Cheaper Than We Think It Is

A new analysis by a one-time atomic energy opponent makes a bull case for big reactors.

Nuclear reactors in a wallet.
Heatmap Illustration/Getty Images

If you know anything about the cost of nuclear energy in America, you probably are aware that the most recent reactors built — the only two new ones designed, planned, and constructed since the 1990s — were budget busters. Units 3 and 4 of Southern Company’s Alvin W. Vogtle Generating Station in eastern Georgia were the first of a new generation of reactor technology ever to be deployed in the U.S. Construction delays, changes to the design, and corporate bankruptcies ultimately sent the price of the pair of Westinghouse AP1000s — the Ford Mustang of American nuclear technology, with safety features that essentially make them not just powerful but also meltdown-proof — to nearly $40 billion, or about $16,350 per kilowatt.

But the U.S. once built reactors for half that — and it did so in the chaotic aftermath of the nation’s worst civilian nuclear accident, when mounting regulations made atomic power construction more onerous than ever before.

Keep reading...Show less
Yellow
AM Briefing

Strait Shooters

On wind’s waitlist, pumped hydro, and Taiwanese nuclear

A ship in the Red Sea.
Heatmap Illustration/Getty Images

Current conditions: Oman’s Ayn Athum Waterfalls burst to life this week as rain battered the Gulf nation’s southwestern Dhofar governorate • Severe monsoon flooding has deluged parts of the American Southwest, including Navajo Nation, where at least three people have died • Tropical Storm Dujuan is barreling toward Japan, where it threatens flooding and landslides in Tokyo and Chiba.


THE TOP FIVE

1. Oil prices dip as U.S. meets with Houthis

When the Houthis stormed Yemen’s Red Sea coast last week, the Iran-backed rebels gained new ground from which to attack boats passing through the vital shipping lane, extending Tehran’s reach from the Persian Gulf’s hotly contested Strait of Hormuz to the waterway on the opposite side of the Arabian peninsula. In response, oil prices surged. But the price per barrel of crude is slipping again as the United States has rebuked Saudi Arabia’s requests for help routing the militants, instead seeking a deal that keeps the Bab al-Mandab Strait open to American and Israeli ships. Over the weekend, U.S. diplomats met with Houthi officials in neutral Oman, Reuters reported. Following the talks, the Times of Israel reported that Houthis promised not to attack any Israeli or commercial ships of any kind, only those linked to Saudi Arabia, which has funded the Yemeni government’s campaign against the rebels.

Keep reading...Show less
Blue