Resilience has become a critical resource for the grid just as efficiency was in the 1970s. As was the case with efficiency, some of the best solutions will be found on the customer side of the meter. The time is right for electric utilities and their regulators to apply lessons learned from utility energy efficiency programs to system resilience efforts.
Customers: An untapped resource for energy system resilience
Mounting threats, particularly from climate change, are making power outages more frequent and longer in duration. The decade from 2011-2021 experienced 64% more major power outages than from 2000-2010. The most recent U.S. National Climate Assessment from 2018 states that “Climate change and extreme weather events are expected to increasingly disrupt our Nation’s energy and transportation systems, threatening more frequent and longer-lasting power outages … with cascading impacts on other critical sectors.”
The job of improving energy resilience is typically left to the electric utilities, as they control the delivery infrastructure. It is important to acknowledge, though, that there is no way to build a failure-proof electricity distribution system. Improving reliability and resilience always comes at a cost and, at some point, the marginal benefit to customers of additional grid hardening, segmentation, redundancy, etc., diminishes below the societal benefits. Utilities and regulators have recognized this and work to ensure that each additional dollar spent on the distribution system brings tangible benefits to customers. As with energy efficiency, there are some resilience solutions that are best implemented on the customer-side of the equation. This includes hardware solutions to provide backup power to critical facilities, but it also includes planning, training, and coordination solutions that allow utility customers to be better prepared to respond to extended outages.
The need for energy resilience is centered in the communities themselves. The reason we care about keeping electricity up and running is not to protect the profits of utilities. It is to protect the public health of communities that rely on hospitals, lifesaving equipment, first responders, and heating and cooling equipment. It is to keep people connected in times of emergency. It is to prevent economy-wide impacts from lost products, productivity, and education. This is not a utility-only problem, and our solutions should not be solely focused on utility actions.
So, if there are solutions best sited behind the meter that directly impact customer outcomes, should these solutions be left to individual customers and the market of behind-the-meter resilience solution providers? That seems to be the default approach in the U.S. and many companies are taking action with on-site generation, planning, and even microgrids. There is a strong case to be made, however, that the utility, as the distribution system operator and sometimes sole energy provider, can play a valuable role in helping customers realize their on-site resilience opportunities.
4 benefits to utilities as active partners in community resilience efforts
Be a center of excellence
There are numerous opportunities to expand knowledge about energy resilience opportunities among businesses, local governments, and residents. Utilities have been thinking about this issue for a while and can serve as a central source for effective information. The Baltimore Gas & Electric Smart Savers program is an excellent example of this as they offer a one-stop-shop for customers looking to connect to energy saving guidance, rebates, third party providers, etc.
Aggregate public benefits
Every utility customer spending a few dollars a year on their own energy resilience would be unlikely to have any impact on community outcomes. However, if regulators were to approve utilities collecting system benefits charge dollars to fund resilience activities, the utility could focus those dollars on programs that would help entire communities. This approach is similar to the way housing developers make neighborhood-wide investments in initiatives like undergrounding utility lines. This is an expense individual homemakers could never make, but the aggregated investment of all makes it possible.
Amplify public interest
Utility programs that engage customers and communities around resilience can also generate increased interest from those parties in making their own resilience investments. If utilities can advise customers on the best way to invest in resilience to reduce risk, the likelihood of those investments goes up. There is also a suite of state and federal resilience grant programs (with more funding on the way from recent legislation) that customers might leverage if educated around these opportunities by the utility. Beyond leveraging other funding sources, there is evidence that each dollar invested in areas like energy efficiency and clean energy programs can have multiplier effects—generating additional investment. There is every reason to believe that the same would be true of resilience investments.
Maintain customer satisfaction
Utilities continually make system investments, but they need to keep customer satisfaction high if they are going to continue to justify their periodic rate cases to the regulator. Most customers only really think about the electricity grid when the electricity is out. When there are long-duration outages, utilities come under extreme scrutiny. By developing customer-focused resilience programs, utilities can demonstrate their commitment to partnering with customers even when extreme events take down the grid. Having those resilience programs in place will also improve outcomes for those customers leading to fewer negative impacts and improvements in satisfaction. After making major investments in grid resilience in the 2010’s, Florida Power & Light’s customer satisfaction increased and received the JD Power’s highest ranking in residential customer service among large electric utilities in the southern U.S. in 2020 and 2021.
Utility customer resilience program options
Much like today’s utility energy efficiency programs, utility customer resilience programs could involve a diverse suite of solutions.
Utilities can serve as a centralized educator to customers around what they can do to improve resilience. They can provide training and planning guides or templates (many of which exist already). Different types of customers would need different kinds of information. Community governments would benefit from resilience planning training and information about building codes. Commercial customers would benefit from information about how and when to evaluate on-site power options. Residential customers would benefit from training in what to do during long-term energy outages and steps they can take to prepare. All customers would benefit from information about likely climate threats in their areas as well as government resilience tools and grant programs. Duke Energy is actively providing these kinds of resources to communities today and is evaluating ways to expand their offerings.
There is also no reason for utilities in each state or region to develop the resources discussed in this article in a vacuum. Education and training resources could be utilized across all utilities in each state with information customized for the unique needs and challenges of the customers and system in each service territory. ICF supports and facilitates the New York Joint Utilities program where utilities work “together to advance state policy goals and respond to Public Service Commission (Commission) proceedings, often collaborating with stakeholders through outreach and engagement to achieve a better understanding of shared needs and objectives, with an emphasis on distribution-connected, small-scale energy resources.”
Resilience preparation is never as potent when done in isolation. Coordination across different geographies and types of customers creates additional understanding around threats and how others are planning to respond to those threats. A resilience planning workshop where customers can learn from experts and collaborate with each other could be done in geographic cohorts to encourage collaboration within communities. This coordination increases the sharing of best practices but also allows for coordination of planning efforts, yielding better results for utility customers. The electric utility, as the common energy service provider for all customers in an area, is a logical choice to facilitate this collaboration.
There are some equipment investments that will support customer resilience. This includes batteries, generators, communications equipment, etc. Just as utilities sometimes provide incentives or rebates for energy efficiency equipment like programmable thermostats, they could likewise provide incentives for resilience investments. These funds, if approved by the regulator, could be used to promote increased presence of these technologies within the customer base—improving overall resilience.
Some behind-the-meter solutions like microgrids provide clear resilience benefits to customers and the grid. Regulators and utilities can increase the adoption of these systems through improved clarity and process to approve and interconnect these systems to the grid. The California Public Utility Commission is one regulatory body that has addressed this with the integrated capacity analysis website allowing developers to better understand where there is grid capacity for DER projects. The Commission has also clarified interconnection rules and expanded the parameters for projects to be fast-tracked.
Any utility effort around resilience should engage proactively with other utility planning work. On the customer side, for example, building efficiency can have an impact on energy resilience—particularly in colder climates. A customer resilience program could connect with the utility’s energy efficiency team to share how improved building envelopes can help extend ride-through times. A utility might also consider communications with local communities about how building codes might impact resilience.
Which customers would benefit most from partnership?
If regulators and utilities agree that a customer-focused resilience program makes sense, where should those efforts be targeted? That is a question that will need to be addressed between each utility and their regulator. But there are certain factors that are worth consideration early in any resilience program planning effort:
Critical services like hospitals and first responders are point sources that provide value across the entire community—particularly during major events that might cause power outages. Utilities already prioritize these facilities for reconnection and many of these facilities have on-site generation in place. Still, understanding and addressing additional resilience needs of these customers is a critical first step in any customer resilience program.
Remote communities at the end of long laterals are typically at greater risk of losing power for extended periods of time and have fewer neighboring resources to draw from. In the West, lines to these communities are being increasingly deenergized to avoid wildfire risk. This is why California utilities have been attempting to build microgrids at some of their remote communities. Even in California where these challenges are quite stark, there have been considerable regulatory barriers to utility ownership of microgrids, slowing development. Many other states, particularly those deregulated states where utilities are forbidden from owning generation assets, are facing similar challenges in fostering utility ownership of microgrids. For remote communities in these places, programs that support customer-side resilience could be an effective middle-ground.
Commercial customers may face serious economic consequences as a result of a power loss. In addition to lost productivity, power loss may lead to damage or loss of product and equipment. Businesses lose tens of billions each year because of power outage from extreme weather events. Extended outages impact different businesses in different ways. Businesses have opportunities to reduce their exposure to these risks, but partnership with electric utilities would give them more in the way of tools, resources, and collaboration.
Social equity is another factor utilities should consider when targeting resilience programs. When making equitable investments in grid resilience, utilities should consider socio-economic factors, environmental justice concerns, and traditionally underserved communities. For example, the Climate and Economic Justice Screening Tool can be used to identify census tracts that are overburdened or underserved. Tribal communities may fall under multiple categories worthy of focus and have access to additional federal grant dollars for their resilience efforts. Electric utilities all over the country have developed energy efficiency programs targeting low-income households; there are even some programs that focus on empowering those households to deploy distributed energy resources.
Finally, some customers will have a better ability to partner with their utility around resilience efforts. Smaller customers and communities may not have the bandwidth to dedicate hours to understanding and leveraging resilience planning resources and opportunities. Any utility-customer resilience program should address both those ready and eager to partner as well as customers that have little time and few resources to participate.
Once utilities have decided which customers to target, the question becomes how best to help them participate in resilience programs. There are several steps utilities can take to expand their ability to engender more energy resilience activities on the customer side.
Step 1: Utility-regulator conversations
Utility grids will not become more resilient on their own. Utilities and regulators need to come together to discuss the importance of system resilience and what role (if any) utilities should have supporting customer-side efforts. If those parties agree that more should be done to prepare for climate change, extreme events, and other system threats, this creates opportunity for discussion about the most cost-effective approaches to make those preparations—and how they will be paid for. Frank conversations between these parties (ideally with customer stakeholder input) is the critical precursor to action. This work is happening right now in New York state where the Public Service Commission has directed utilities to develop climate vulnerability studies and develop 10 and 20-year resilience plans.
Step 2: Determine funding mechanisms
Whatever investments or programs are pursued for customer resilience will require some kind of dedicated funding. As with energy efficiency programs, part of the utility’s system benefit charge could be used to make investments in customer resilience programs from education to product rebates and incentives. Any such effort would require regulatory approval. A bigger-picture approach would involve the transition to a performance-based regulation model where utilities make their profits based on their ability to achieve performance goals, including resilience.
Step 3: Engage customers around needs
Every utility has teams in place that engage customers on issues of joint concern. Utilities interested in supporting customer resilience needs should start by talking to their customers, with a focus on the customer types identified above. Any program or offerings developed should be ones those customers are most likely to take advantage of.
Step 4: Develop a customer resilience program
Once the regulatory direction, funding level, and customer inputs are understood, utilities should work together to develop a holistic customer resilience program.
Customer-focused utility resilience programs are an insurance policy against the increasing likelihood of extended outages. Nominal investments that reduce the risk and impact of major outage events can lead to large returns in terms of avoided costs.
Regulators are evaluating the impact of major events on the customer bases they are charged with serving. They should also start asking what role utilities can play beyond the integrity of their own distribution systems. Utilities should evaluate how behind-the-meter resilience efforts can help them improve overall grid efficiency and customer satisfaction. If these groups agree to act on this idea, there are a myriad of options for improving outcomes for energy customers when the unexpected happens.