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Changes ahead in electric industry may be more revolutionary than evolutionary, New York utility says in strategic plan


From the March 28, 2014 issue of Public Power Daily

Originally published March 28, 2014

By Jeannine Anderson
Editor

As the energy industry evolves, "there are now signs domestically and abroad that change will be revolutionary rather than evolutionary and will fundamentally impact the ways in which energy is produced, transported and consumed," the New York Power Authority said its updated strategic plan, released by the state-owned utility on March 25. 

The use of renewable energy, for example, "while still a relatively small part of the energy mix, is steadily increasing," the power authority said. This growth, "particularly when it is located at the customer site, will lead to new spikes and volatility in the electricity load requirements being served by traditional generating stations." 

The energy industry "is in the early stages of transformative change that will dramatically alter the way electric power is generated, delivered and used by our customers," said NYPA Chairman John R. Koelmel. NYPA's new plan, called Strategic Vision 2014-2019, reflects how the power authority "must also change, adapt and lead moving forward," he said.

For  much of its history, the electricity industry "has been based on a fundamental operating model: electricity, produced at large central power plants, is carried by long-distance transmission lines and local distribution lines to residential and business customers," the strategic plan says. "But now, thanks to advances in technology and cost reductions in small-scale, clean generation, we are able to boldly reimagine the power system to meet the needs of an environmentally sustainable, energy-driven economy of the 21st century."

In the future, "the distinction between generators and consumers is blurred," NYPA said.

Increasingly, "customers are able to generate their own electricity using technologies such as solar power or combined heat and power," the power authority said. "Batteries are coming down in cost, and are approaching commercial viability for use by customers in storing power and matching the timing of their power demand. Smart meters and other information technologies are enabling customers to understand and manage their energy usage more efficiently." And manufacturing customers "are able to use these and many other technologies and energy management tools to improve the quality and reliability of power that is critical to their operations."

Customers "are becoming increasingly sophisticated about their consumption of energy," NYPA said. "They are demanding products and services tailored to their needs and desired outcomes." The utility said its customers "have many motivations to customize their energy products," including:
•  a desire to reduce energy costs;
•  a need for additional resiliency to guard against severe weather or other threats; and
•  a commitment to environmental and sustainability goals.

"We envision a future where customers increasingly have new choices in energy technologies and services that enable them to improve the value they receive from their use of energy," NYPA said. "Whether they want to reduce costs, lessen their carbon footprint, or improve the resiliency and quality of the power they use, there are providers and markets for the products and services to help achieve their goals."

Power outages caused by severe weather and equipment failures on the grid "have prompted customers to consider grid independence options," the strategic plan notes. "Consumers partially or completely leaving the grid will skew transmission and distribution cost recovery models that are based only on full service business models."

Conditions in New York state "are expected to mirror the changes in global energy markets, resulting in a shift toward customer empowerment, decentralized energy generation and greater use of data in the operation and maintenance of the transmission network," the power authority said. To accommodate the volatility introduced by renewable resources, "the grid will require large-scale generation that can be brought online rapidly and cycled on and off as needed."

"The world is becoming more attuned to the impact of our actions on the environment," NYPA said. "This is leading to questions about the sustainability of the way we live, particularly in the energy sphere as we recognize the potential carbon impacts of traditional generation sources."

"What you will see in the pages of our Strategic Vision is more focus on our customers and how to serve their needs in the increasingly dynamic energy marketplace," said NYPA President and CEO Gil C. Quiniones. The document provides a road map for this, and "we hope that it will also mark the beginning of a dialogue with our customers, our other stakeholders and all interested New Yorkers," he said.

The Strategic Vision, 2014-2019, is posted on the NYPA website

 

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