The POWER Podcast

How a Major Resort Owner Manages Its Power. MGM Resorts International took a bold step in 2016 when it ended its energy-buying relationship with NV Energy and instead chose to purchase electricity from private providers. The company’s decision was driven by a desire to slash bills and boost renewables. Henry Shields, executive director of finance and analysis in the Corporate Sustainability division of MGM Resorts International, was a guest on The POWER Podcast. Shields will be a keynote presenter at the ELECTRIC POWER Conference and Exhibition, which will be held at The Mirage Events Center in Las Vegas, Nevada, April 23–26, 2019. On the podcast, Shields explained how the changes played out in practice. “Nevada’s not a deregulated state in the purest sense,” Shields said. “However, there’s been a law in Nevada on a very limited path for certain sophisticated commercial customers to do what we did.” “What we did was separate from the utility in terms of the actual procurement of electricity so that we were able to source our power from the wider market. We do remain actively—and will so in the future—very much a customer of NV Energy, but now for local lines and wires, and transmission service only,” Shields said. Concerning renewable energy, MGM Resorts International has really embraced solar power. Even before it broke away from NV Energy, MGM installed more than 26,000 photovoltaic (PV) panels on its Mandalay Bay Convention Center—about 28 acres of rooftop area. Furthermore, in April 2018, the company announced it was partnering with Chicago-based Invenergy, North America’s largest independent renewable energy company, to construct a solar project about 25 miles north of Las Vegas. At full production, the 100-MW solar array is expected to provide up to 90% of the total daytime power needs for MGM Resorts’ 13 Las Vegas Strip locations. Shields said the project would go a long way toward meeting the company’s published goal of reducing its carbon intensity by 50% by 2030.

Royce Peters, senior technical coordinator for the Carpenters International Training Center (ITC) in Las Vegas, Nevada, was a guest on The POWER Podcast. The ITC is the largest and most-comprehensive training facility of its kind in the world. Following the completion of phase six of construction in 2018, the center now has more than 1.2 million square feet under-roof. Peters listed some of the unique training tools available at the facility, including a Frame 7 gas turbine, a 64-MW steam turbine, eight overhead bridge cranes, and a 16,000-gallon underwater-welding dive tank, among other things. The facility is one of the largest publishers of technical training materials in the world, with more than 120 books created and more under development. The Carpenters International Training Fund and its affiliated funds invest more than $200 million a year to develop and deliver training, enhance knowledge and skill sets, and create new opportunities for United Brotherhood of Carpenters and Joiners of America (UBC) members. Outreach programs include Career Connections, which targets high schoolers and inner-city residents, among others, with training leading to a career in the industry, and Helmets to Hardhats, which gives military members the opportunity to transition more easily to the civilian workforce. But people interested in joining the UBC don’t have to go through one of the outreach programs, anyone can apply by contacting their nearest regional council office. There’s a lot of see at the ITC and the ELECTRIC POWER Conference and Exhibition is making it possible by offering a tour of the facility as an option for attendees. To learn more and to register for the event, which will be held April 23–26, 2019, at The Mirage Events Center in Las Vegas, visit: https://2019.electricpowerexpo.com/.

Carol Holahan, counsel in Foley Hoag’s Energy & Cleantech practice, was a guest on The POWER Podcast. Holahan advises large regional generators and other participants in the wholesale and retail competitive electricity markets on policy initiatives, changing environmental regulations, decommissioning and sale of plants, and matters pending before the Federal Energy Regulatory Commission (FERC). During her interview, Holahan explained some of the differences between natural gas pipeline and bulk power system cybersecurity requirements. Currently, the Transportation Security Administration (TSA) is responsible for oversight of the gas pipeline system. Holahan said the U.S. system comprises a 2.7 million-mile network. Yet, according to a letter written by two FERC commissioners last year, TSA has only six employees dedicated to pipeline oversight. Furthermore, TSA has no mandatory compliance or reporting requirements, and relies on companies basically self-reporting, especially with respect to cybersecurity events. Oversight of the U.S. bulk power system is markedly different. It is mandatory and quite complicated, with FERC, the North American Electric Reliability Corp. (NERC), the Department of Homeland Security, and the Department of Energy (DOE) all involved in some aspect of oversight. The disparity between the requirements for gas and electric infrastructure, combined with a computer hacking event last year that affected multiple pipeline companies, led two FERC commissioners—one Democrat and one Republican—to write a joint letter urging the transfer of gas pipeline oversight to the DOE. To date, changes in the oversight structure are still being debated in Washington with no clear resolution in sight. While cybersecurity is easy to neglect, Holahan said a recent $10 million fine issued by NERC against an unnamed power company for alleged cybersecurity violations sent a very clear message to all U.S. utilities subject to NERC requirements: “If you had not been paying attention to cybersecurity to date, you better start.” Holahan touched on the changing landscape of power generation. She noted that Brayton Point—the last big coal-fired power plant in New England—was retired last year and Pilgrim nuclear plant will be shuttered this year, removing hundreds of MW from the grid. What’s coming online is new gas, solar, and wind generation, including the promise of more offshore wind. Pairing battery storage with renewables is allowing intermittent resources to participate in the market as baseload power. While noting that FERC has traditionally operated above the political fray, Holahan said there is some concern that the DOE will continue to exert pressure on the agency to provide relief for certain types of units, especially coal-fired plants. Furthermore, Holahan thinks it will be interesting to see how FERC responds to various state policies that support certain resources, such as nuclear and renewables. “I think it will be well worth watching what models FERC is going to approve that will allow these resources to participate without compromising price formation or market entry and exit signals.” she said.

Prepare for More Distributed Energy Resources. Paul DeCotis, senior director in West Monroe Partners’ Energy and Utilities practice, was a guest on The POWER Podcast. West Monroe, in partnership with Greentech Media, conducted a survey of more than 1,700 utility customers, 140 utility executives and managers, and more than two dozen regulators in major markets across North America. Its findings were released in a report titled Planning for a Distributed Energy Future. Interestingly, 92% of survey respondents said they had distributed energy resources (DERs) on their system, up from 80% when the survey was conducted three years ago. However, DeCotis noted during the podcast that DERs are not yet universally economical throughout the U.S. “Not all states and regulatory jurisdictions handle DERs the same. It’ll be a few years before we see very significant DER penetrations uniformly across the country,” DeCotis said. “DERs still need substantial backup generation because utilities have the obligation to serve load and be the provider of last resort, so the industry will develop cautiously in some parts of the country until regulations become more certain and incentives become more mature,” he added. The report notes that distributed energy resource management system (DERMS) technology is on many utilities’ radar, but more than half of respondents said they had no concrete plans to invest in it. “As the system gets more distributed, [utilities] do need a way to have visibility and to manage that system so that they can be the provider of last resort,” DeCotis said. Therefore, DERMS technology will continue to become more and more important as DERs are added to the grid.

Community Solar Power Offers the ‘Best of Both Worlds.’ Laura Stern, co-founder and president of Nautilus Solar Energy, was a guest on The POWER Podcast. Founded in 2006, Nautilus is a leading acquirer, developer, and operator of community solar projects. During the past five months, the company has acquired community solar projects in Minnesota, Massachusetts, New York, Maryland, and Rhode Island. Community solar refers to local solar facilities shared by multiple community subscribers who receive credit on their electricity bills for their share of the power produced. This solar power model is being rapidly adopted throughout the U.S. According to the Solar Energy Industries Association—the national trade association of the U.S. solar energy industry—there was 1,294 MW of installed community solar capacity at the end of June 2018, with at least one community solar project online in 42 states. Furthermore, the group says the market will add as much as 3 GW over the next several years. Community solar allows homeowners, renters, and businesses to have equal access to the economic and environmental benefits of solar energy generation regardless of the physical attributes or ownership of their homes or businesses. It’s particularly beneficial for low-to-moderate income customers most affected by a lack of access, and it helps build a stronger, more-distributed and -resilient electric grid. “It’s kind of the best of both worlds,” Stern said. “It is the best physical configuration of a solar plant, and it’s the best kind of off-take in terms of diversifying your risk among a number of subscribers, not being captive to an on-site customer, and being able to update that list of customers as your project advances.”

Izzet Bensusan, managing partner and founder of Captona, a North American-focused investment company that specializes in power generation and energy infrastructure, was a guest on The POWER Podcast. He is very bullish on the renewable energy industry for a variety of reasons. For instance, Bensusan said renewable energy is growing at more than 20% around the world because companies behind the technology are making it more efficient, cheaper, and better. He suggested new renewable generation is being added, not because of special incentives or sustainability angles, but rather, because it makes economic sense. When asked about promising opportunities in the renewable sector, Bensusan said the repowering of wind farms makes sense these days because new technology can improve output while using much of the same infrastructure. He was also optimistic about the U.S. offshore wind market in the long-term, but he didn’t expect it to take off in the next three years. Concerning other renewable resources, Bensusan said solar projects are now “mainstream” and financing has become “plain vanilla.” He said, “That means, anyone and everyone can really get capital to build small, medium, or large projects.” Community solar is growing too, and bankers—the people who provide the financing—are becoming comfortable with the investment. Bensusan expects a spike in new solar projects in 2019, mainly because the investment tax credit will have a step-down next year. Nonetheless, he has been in the industry long enough to know that surprises happen regularly. This year, interest rates could provide a shock. When rates go up, the leverage factor in projects could get extremely tight. “It’s going to be very unique to watch when that next step-up happens,” Bensusan said. “I think watching those markets closely is very important for the renewable energy market.”

Optimizing power plant control systems can be challenging, but new tools are available to simplify and improve the process. On this episode of The POWER Podcast, Executive Editor Aaron Larson spoke with Jon Towslee, digital engagement leader for ABB Inc.’s Industrial Automation Power Generation & Water business. Towslee explained how ABB Ability is focused on improving customers’ businesses by optimizing assets and operator effectiveness, and enhancing top-to-bottom performance. Solutions like the company’s loop performance monitor can be used to identify such things as transmitters that are providing bad data, noisy signal lines, and actuators that aren’t working correctly. Once maintenance crews have all equipment functioning properly, technicians can evaluate process control schemes to ensure they are responding appropriately, which then permits loops to be tuned for optimal performance. The loop performance monitor evaluates control loops on 17 different parameters. Once individual loops are optimized, higher-level adjustments can be made. Ultimately, the tools allow plant operators to expand boundaries and operate plants more closely to maximum safe operating limits. This enhances performance and increases profitability.

The Jackson Hole Center for Global Affairs—a bipartisan think tank—will host the “Jackson Hole Global Forum: Climate Solutions, Coal Communities, and Economic Diversification” in Wyoming, November 8–9, 2018. Among the sessions on day one is a panel titled “What Is Coal’s Future?” Charles K. Ebinger, nonresident senior fellow with the Atlantic Council, will be one of the panelists. Ebinger touched on some of the issues facing the coal industry on an episode of The POWER Podcast. He said the question—“What is coal’s future?”—really needed to be answered in two parts: one addressing challenges in the U.S. and the other taking a broader look at coal usage around the world. Although coal faces stiff headwinds in the U.S., demand in Asia is very robust, growing 5% or more per year in some places. The fact is, hundreds of millions of people still do not have electricity in various parts of the world, and hundreds of millions of others don’t have truly reliable sources of power. Furthermore, the industry employs a very large number of people globally and scaling back coal is considered political suicide for government officials in many parts of the world. Ebinger said the U.S. has a major role to play in combatting climate change through the development of carbon capture and sequestration (CCS) technology. He suggested proving CCS technology viable, and exporting it around the world, could offer economic benefits at home, while helping to reduce global carbon emissions. Ebinger said there are challenges, but with the right backing, breakthroughs may be possible. The podcast includes some climate change discussion and briefly touches on the future of nuclear power in the generation mix, including talk about small modular reactors and potential changes needed in the regulatory process. The forum in Jackson Hole offers global perspectives on energy, climate, and economics. A keynote presentation by Han Wenke, former director general for China’s Energy Research Institute of the National Development Reform Commission is sure to be interesting. Other sessions include policy models, climate change and national security, wind and economic diversification, blockchain as an economic growth driver, and more.

It is safe to say that all electricity customers want reliable and resilient power service. One way that some end-users are ensuring they get it is by investing in distributed energy resources and building microgrids. But rather than simply using these systems as emergency backups, more and more owners are finding ways to capture economic benefits from them. Distributed energy resources can help shave peak loads, shift time-of-use, and support ancillary services, which all provide value to owners. Nonetheless, utilities generally set the rules; they establish the rate tariffs. As such, utilities have the ability to alter how the game is played. According to Amy Simpkins, CEO of muGrid, there are a number of ways that utilities can influence how large commercial and industrial customers behave simply by modifying the rules. Simpkins will give a presentation at the Distributed Energy Conference in Golden, Colorado, October 15–17, 2018, during which she will offer a few case studies and show some sensitivity analysis. What would happen if demand charges were increased? What if the look-back period was modified? What if time-of-use rates were shuffled? Simpkins’ presentation—“How to Incentivize Your Utility Customers to Do What You Want”—will focus on the “knobs utilities can turn” to sway customer behavior. Attendees may find that power companies have more control than they realize over what customers choose to do in the end. Furthermore, the solution can be win-win.

Roy Palk, president of New Horizons Consulting, will give a presentation titled "The Rise of Distributed Energy — New Challenges Bring New Opportunities" during the Distributed Energy Conference, which will be held October 15–17, 2018, in Golden, Colorado. In this podcast, Mr. Palk gives a brief preview of his talk. He says the power market is changing and suggest utilities must evolve if they want to continue to be a trusted energy provider for customers.