Patti Poppe on Big Data and Optimizing Energy Use

June 4, 2020

Patti Poppe is CEO of CMS Energy, the country’s 10th largest utility, last time I looked, based in Jackson, MI.
Here’s part of her recent presentation dealing with the implications of bigger, better data in managing the “demand side” of the generation equation – game changer for utilities globally.

Wall Street Journal:

“We were walking through people’s backyards to figure out how much energy they were using a month,” says Ms. Poppe, also the CEO of Consumers parent CMS Energy. “Technology has evolved to the point where we can optimize energy usage for the first time.”

The focus on managing energy consumption seems counterintuitive for a company that earns much of its revenue by selling electrons. But for Consumers, it’s key to making sure demand matches supply as it replaces large, carbon-intensive power sources with smaller, cleaner ones that will cost less to operate and put it ahead of many other utilities in slashing carbon emissions. It’s also necessary to prepare for a future where utilities sell less power but have a greater hand in coordinating its usage through services billed to customers.

For decades, utilities in much of the world have enjoyed monopoly status as the sole entities providing and delivering electricity. Now they are being forced to change as businesses and homeowners install solar panels, batteries to store that solar power, and other generation options that reduce dependence on the utility. Electricity consumption has also plateaued in many parts of the U.S. due to energy-efficiency improvements, creating a need for the companies to generate profits through more than just selling power.

All of that means revenue growth has slowed for utilities at a time when many are under pressure from customers, regulators and lawmakers to repair deteriorating power grids built for last century’s population boom and to reconfigure them for a lower-consumption, lower-carbon future. The question utility executives face is how to make those massive infrastructure investments and not bleed customers dry with rate increases when it’s easier than ever for those customers to defect.

“It’s a huge challenge, and the smart utilities are going to have to invest with that long-term vision of having a much more decentralized grid,” says Michael Wara, head of the climate- and energy-policy program at Stanford University’s Woods Institute.

For Consumers, the plan involves generating more than half of its electricity from renewable sources by 2040, up from 11% last year. To do so, and offset losses from plant closures, it plans to add six gigawatts of solar power—requiring a total of 59 square miles of solar panels clustered across its service territory—as well as a smaller amount of wind power. Increasingly, both technologies compete on cost with natural gas, and because wind and sun are free, the utility will save hundreds of millions of dollars a year on fuel expenses. 

The transition will come at a cost. The company says it will spend at least $25 billion over the next decade to replace aging gas and electric equipment and prepare the grid for more renewables, batteries and electric vehicles—major capital investments that would eventually boost returns for shareholders. The expenditures will likely result in rate increases for customers, though Consumers anticipates keeping them below the rate of inflation in the coming years.

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