Shaping our energy future
Shaping our energy future
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In 2014, our collective challenge is that current energy networks can’t support 21st century requirements and innovations. We are working in an exciting digital economy with pre-digital network solutions.
Across the US, the energy network needs some $2.5 trillion of investment by 2035, much of it to replace aging equipment.
In the Northeast, we have an extraordinary opportunity to optimize our energy networks. By making smart investments in our infrastructure – supported by innovative regulatory frameworks, innovative regional policies, and innovative technology (we need all three!) - we can then advance the economic and environmental health of our communities.
The key of course is starting with our regulatory paradigm. Without forward-planning regulatory innovation – a real change to the regulatory paradigm – these necessary infrastructure investments to our networks won’t happen.”
Our infrastructure, the energy backbone, needs greater agility, greater resiliency, and greater efficiency. Smarter transmission and distribution network designs are needed for greater reliability, more customized solutions, and more efficient restoration efforts.
A more resilient energy backbone is one that responds effectively to the increasing diversity of energy demands and one that can withstand the increased frequency and intensity of extreme weather. Which, post-Sandy and Nemo, I think we can all agree is going to be the new normal.
Central to strengthening resiliency in New England is optimizing the interdependency of electric and natural gas.
Over half of the electricity generation in New England comes from natural gas.
About half of the homes in Massachusetts are heated by natural gas and that number is on the rise.
We saw firsthand this winter how limited pipeline capacity, complicated by two appearances of the polar vortex, caused spikes in wholesale natural gas prices.
Energy market costs were $5 billion during this past winter, compared to $5.2 billion for all of 2012.
This has direct consequences for our customers.
The commodity portion of our Massachusetts retail electric customers’ bills was up by 35 percent compared to the year before. And we anticipate 40 percent over that for next winter.
And the natural gas we purchase for our customers is up 30 percent compared to last year.
The growing interdependency between gas and electricity will require long-term investments. We absolutely need new natural gas pipelines to the region. And we also need to invest in our existing bulk power network.
Take for example the transmission project we call “NEEWS.”
The “New England East-West Solution” or “NEEWS” is a partnership we’ve undertaken with Northeast Utilities.
“NEEWS” is a collection of electric transmission projects that will improve the reliability and performance of the bulk power network in southern New England. The Interstate Reliability Project is the latest piece of NEEWS to start construction, and it involves 75 miles of new 345 kV lines.
By strengthening the network in New England, NEEWs will improve operational flexibility, reduce congestion, alleviate customer costs, and better integrate cleaner generation resources.
National Grid’s Connect21 framework, our strategic vision, links customer needs and policy goals with technology and market solutions. In other words, going forward, every dollar we invest in our networks is going toward making our 20th century networks better respond to our 21st century economic and environmental needs.
To give you a better picture of the opportunity and our progress, let me highlight four quick examples of some of our efforts in Massachusetts.
First, our Worcester smart grid pilot will use time-of-use pricing for energy service, seek overall energy usage reductions of 5% or more, and use advanced technology to operate a smart grid system in a limited geographic area.
Second, the Massachusetts Department of Energy Resources completed a study which provides recommendations for natural gas expansion across the State. National Grid was very active in the process and I’m anxious to see the study results. We expect it will provide guidance on policy issues including Contributions in Aid of Construction, the cost recovery method for significant main expansion, and how we can expand into cities and towns not currently served by natural gas.
Third, the DOER and the legislature are looking at the important topic of solar generation and net metering rules. We are actively engaged in the discussions with the solar community over Legislation to support Governor Patrick’s 1,600 MW goal, with the idea of lowering costs for our customers AND guaranteeing the long term development of solar renewable energy.
And last, the Mass Department of Public Utilities set out to explore and create new rules around modernizing the 20th century grid we operate today. I expect we’ll see the outcome of this effort in the summer or fall. And for us, this is key to stepping into the 21st century and implementing our Connect21 strategy.
In the same light on a larger scale, I’m also proud that National Grid is a founding member of the Natural Gas Downstream Initiative; partnering with the US Department of Energy and EPA, on managing and reducing methane emissions from gas networks.
The Downstream Initiative seeks to identify and encourage programs that: Accelerate investments in infrastructure, promote operational excellence, and utilize advanced technologies.
One other challenge we face – our future workforce. Both here in the US and in our UK business, we simply can’t hire engineers fast enough. And we have similar challenges with other technical fields and our physical workers.
So what are we doing?
We partner with community colleges to create certificate programs for line workers and soon we’ll add gas mechanics to that effort. We partner with 4-year engineering schools to encourage power engineering studies, internships and graduate hiring programs. And for the longer term, we partner with K-12 schools to spark interest in kids who might find excitement in engineering or other STEM fields.
It is crucial that all of us come together to establish a roadmap addressing our energy needs and environmental challenges. We’ll need all sorts of partnerships – with our regulators, our community leaders, and our customers, large and small.