Deloitte’s Canadian branch has published a paper (Empowering Ideas) that I feel accurately identifies many of the key issues that are of great consequence to the energy industry as well as energy consumers (i.e. virtually everyone in North America).

Deloitte focuses on 10 specific emerging issues in the paper, each affected by three overarching trends: the need to tackle infrastructure obsolescence, the challenge of keeping the looming energy crisis at bay and the development of divergent ownership models. While the 10 issues are covered with some depth in the paper itself, below you will find Deloitte’s explanation of the three trends, as expressed in the media email release (as opposed to the press release, found here):

 ·        Tackling infrastructure obsolescence - Recent research shows that the U.S. alone would require US$1 trillion in additional capital over the next five years to refinance existing generation and network assets and invest in both existing and new assets.  To complicate matters, power and utilities organizations and their governments are being asked to commit existing funds in an environment of serious regulatory and technological uncertainty.

·        Keeping an energy crisis at bay - Organizations are being challenged both to curtail demand and to find ways to meet demand beyond increasing generation. Effective demand management can be achieved only if all industry participants come to recognize that power supply security is about more than increasing installed capacity—it is also about balancing demand by improving energy efficiency and encouraging multinational system integration.

·        Divergent ownership models abound - For the foreseeable future, it appears that capital costs related to electricity, gas and water utilities are on the rise.  This trend requires both government and privately-owned utilities to display innovative management. 

The points outlined above go to the heart of key issues facing the electricity industry. In particular, the point that “organizations are being challenged both to curtail demand and to find ways to meet demand beyond increasing generation,” I believe, holds within it very serious challenges for utilities, customers, regulators and politicians. The assumption seems to be that we have enough generation and should concentrate on ways and means of making better use of the generation we have.   

Consider the following.  The basic model we have for generation, transmission and distribution was devised by Thomas Edison.  His model requires that we design the electricity system for the worst case – maximum expected load plus a reserve margin. Edison’s model has served us well for generations, but everywhere I look I see the drive for change. Whether it is the generation mix, the role of the customer, the underlying utility business model or how electricity is moved and distributed, experts offer countless solutions based on new technology. At what point do we need to rethink or re-cast the basic model? Which aspects of Edison’s electricity system will remain, which will be tweaked, and which will be completely unrecognizable to our children’s children? Which of our tweaks will stand out in 20 years as progress, and which will end as high-cost mistakes levied on future electricity consumers? These are the questions I put to experts in the electricity sector.

I look forward to continuing to engage the discussion in this forum and elsewhere as we strive to tackle the objectives listed above, as well as the 10 others listed in the report.  

 

 

Pierre Guimond

President and CEO

Canadian Electricity Association