Electrification: EU Opportunities for Utility Growth
(Room Lehar 1)
19 Jun 18
2:00 PM
-
3:30 PM
Tracks:
Track 1: Megatrends: Decarbonization, Decentralization and Digitalization
This paper presents a counter-narrative to the often-cited utility “death-spiral”, a vicious cycle in which weak utility sales growth is exacerbated by increasing distributed generation (DG) penetration, but economy-wide greenhouse gas (GHG) emissions far exceed longer-term GHG reduction goals. We present an alternative paradigm, in which utilities achieve stronger growth and society achieves desired GHG reductions based on electrification of the transportation and heating sectors, coupled with decarbonization of the power supply mix. Using a simple modelling framework for the U.S. (which we propose to replicate for Europe), we calculate the technical potential for this alternative scenario, in which U.S. utility sales could nearly double by 2050 while energy sector carbon emissions would decrease by 70 percent. Even partial electrification of the transportation and heating sectors could present a large opportunity for utilities to increase sales and be a major catalyst for reducing economy wide GHG emissions. We also discuss the challenging questions that must be confronted in the transition to greater electrification. For instance, who will bear the costs of this transition? How do those costs compare to alternative options for decarbonizing the economy? How will power grid operations be impacted by new, significant sources of load? How will these load impacts depend on parallel developments such as automated driving and the proliferation of car/ride sharing? Finally, we argue that the pace and scale at which this transition may be achieved can be directly influenced by utilities. We therefor explore a number of initiatives that could be pursued to nudge future industry developments towards electrification.