As Demand For Electricity Falls, Utilities Look To Electric Cars To Save Them
To understand the way the utility industry in America is structured, you have to look back in time to the railroads. When Manifest Destiny and the “iron horse” were transforming the prairies, titanic battles between captains of industry resulted in a welter of competing railroad companies. Competition led to the demise of many. When the age of electricity began, America decided it was better to allow utility companies to operate as vertically integrated monopolies than to have two or more competitors building power plants, putting poles in the ground, and stringing wires everywhere.
The bedrock of the utility industry is the belief that the demand for electricity will increase forever. And for nearly a century, it did. But then in the last years of the 20th century, things changed. The change had nothing to do with renewable energy, natural gas, or electric cars. It had to do with the basic presumption — ever expanding demand — being no longer valid. Instead of going up, up, up, demand stayed the same for several years. In some parts of the country, it even began to fall.
For the first time in US history, GDP continued to rise while demand for electricity remained constant. That was unheard of and sent shock waves throughout the industry. Every 5 years, the TVA creates an Integrated Resource Plan. It’s basically a road map the utility uses to make decisions about what new infrastructure it will need to meet the needs of its customers 20 years from now. Its last IRP was completed in 2015, but falling demand means it has begun revising the current plan 2 years early. According to the Times Free Press, the latest projections are that demand for electricity within the TVA service area will fall 13% by 2027, the first decrease in its 85 year history.
One thing monopolies are very good at is ensuring reliability. One thing they are very poor at is innovation. As the bedrock principle the industry was built on started to crumble, some new ideas began to seep into the system. Then came Enron and all innovation came to a screeching halt. What America has today is a utility system ideally suited to the 1950s. What it needs is a system designed for the 21st century, a system that is built to take advantage of digital technology to balance supply and demand efficiently and reliably.
Utilities once thought of electric cars as threats. Charging them would require massive new investments in infrastructure. Plugging them all in would destabilize the grid and cause hardware like transformers to fail prematurely….