Since the advent of U.S. power generation and its grid, customers have demanded power that’s reliable, safe and affordable. Utilities have delivered by evolving, though these times are proving increasingly challenging as megatrends amplify calls for a modernized grid.
The continued march of climate-friendlier renewable energy (U.S. wind generation capacity jumped by 42 percent between 2019 and 2023) is requiring electric utilities to find a place for it onto an aging grid. Cyberattacks are on the rise, exploiting vulnerabilities that come with broader digital networks. Regulations continue to evolve, stoking uncertainty. Construction of data centers is proliferating, forcing power providers to meet additional load demands. As companies and communities increasingly adopt clean energy and transportation solutions in pursuit of their near-term decarbonization goals, practical and tactical plans with intensifying scope and ambitions turn imperative.
Black & Veatch’s 2024 Electric Report – expert analyses of a survey of nearly 700 U.S. energy industry stakeholders – illustrates a U.S. electric industry landscape filled with challenges and opportunities – and frequent questions about budgets and funding.
Renewables and the Grid
With solar power the fastest-growing source of new generation nationwide, renewable energy is driving capacity in new U.S. energy markets for many reasons: customer decarbonization goals, continued declines in costs of photovoltaic cells, tax credits and other policies.
The 19 GW of new utility-scale solar PV generating capacity that the electric sector began operating last year is up 27% from 2022, despite the downside that solar and wind power are prone to intermittency and must be paired with batteries or other energy storage types. By U.S. Energy Information Administration forecasts, solar and wind power by 2050 will account for 40 to 69% of U.S. electricity generation. It appears the industry has leveled off at roughly 20 GWs per year.
When asked how they expect new generation capacity investments to change over the next five years in their service territories, half of respondents anticipate that energy storage is in need of “much more investment than today,’’ followed by ground-mounted or rooftop solar (34%), microgrids and other DERs (29%).
One in four respondents again characterized accommodating all that renewable energy onto the grid as the power sector’s foremost headwind, tying it with aging infrastructure. Environmental regulations, planning and forecasting uncertainty, and the lack of a skilled workforce were the only other issues that drew at least 20%. Of note: workforce issues – the lack of a skilled workforce, along with its aging employees – accounted for a combined 36% of responses.
Resilience and Reliability: The Need for Grid Mod
Calls for upgrading and hardening the grid in the name of greater resilience are growing louder, knowing that reliable service is at the heart of every utility’s mandate. So, what’s crimping future grid development in the short term of the next three to five years? Nearly half of respondents – 46% – cite the generation mix, with more utility-scale renewables and fewer traditional base load units. That’s followed by supply chain bottlenecks (36%) in trying to procure what’s needed to build out a modernized grid, regulatory lag in addressing the needs for system changes (32%), and the shortage of qualified workers to design and run more complex systems.
With the push and pull of competing interests, many things on the industry’s “to-do” list aren’t close to cheap. Under today’s regulatory models, utilities typically don’t have a way to recapture the fixed costs required for critical upgrades, and ratepayers are likely to object to paying more, making it even more paramount for utilities to present a thoughtful case to regulators – or seek out outside guidance.
Cybersecurity
As cyber criminals grow more sophisticated in attacking electric utility infrastructure as ever-widening use of Internet-connected components expand the potential attack surfaces, the onus is on power providers to detect and remedy vulnerabilities in grid security. One solution is to build in such protections when the infrastructure is first built, rather than adding on.
Topping the list of efforts utilities see most essential in mitigating cybersecurity risks are threat intelligence (36%), monitoring and response (34%), a vulnerability assessment and management (31%) and an incident response plan (25%).
In terms of IT threats, survey respondents deem phishing attacks (69%) and ransomware and malware (both at 45%) as the most concerning. Seven in 10 respondents report at least some level of confidence in their utility’s ability to recover from a cybersecurity attack, but that’s merely reactive after the intrusion already has happened and, unfortunately, the damage is done.
In cybersecurity, nothing is easy. The regulatory landscape constantly shifts and matures, hoping to keep step with emerging risks through new and evolving minimum compliance standards. Grid-modernizing efforts will spur more connectivity, broadening potential vulnerabilities.
As with so many other things on the plate of U.S. power utilities, it all begins with a plan that makes headway in incremental, manageable bites. Reshaping tomorrow’s more resilient grid means being proactive now.
