US utility sector faces ‘death spiral’

According to a new report, US utility professionals believe their sector will change dramatically over the next 10 years.

The report, The State of the Electric Utility from online industry resource UtilityDive, is the website’s first annual survey of over 500 US utility sector professionals. The survey was commissioned by Siemens.

Of the respondents, 95 per cent believe their utility’s regulatory model will change over the next 10 years, and 57 per cent believe it will change significantly.

Among the report’s findings, utility insiders said the main challenges to their business were aging infrastructure (48 per cent), the current regulatory model (32 per cent), an aging workforce (31 per cent), distributed generation (30 per cent), flat demand growth (28 per cent), smart grid deployment (23 per cent) and grid reliability (21 per cent). Other challenges included coal plant retirements (17 per cent), states’ Renewable Portfolio Standards (17 per cent), energy efficiency mandates (16 per cent), emissions standards (12 per cent) and cybersecurity (11 per cent).

Most survey respondents said their utilities anticipate little to no demand growth in the next five years, with almost one quarter expecting zero or declining load growth. When asked what their utilities should do to address the dreaded ‘death spiral’, 65 per cent said they need to develop a new business model, while 43 per cent suggested investing in distributed generation. (When asked how they viewed distributed generation, 57 per cent labelled it an opportunity for utilities while 38 per cent said it is a threat.) Some 54 per cent said their utility was experiencing pressure from stakeholders to provide clean or sustainable energy.

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