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Puerto Rico Microgrid Regulations outline renewable energy, CHP, and storage standards, enabling islanded systems, PREPA interconnection, excess energy sales, and IRP alignment to boost resilience, distributed resources, and community power across the recovering grid.

Key Points

Rules defining microgrids, requiring 75 percent renewables or CHP, and setting interconnection and PREPA fee frameworks.

✅ 75 percent renewables or CHP; hybrids allowed

✅ Registration, engineer inspection, and annual generation reports

✅ PREPA interconnection fees; excess energy sales permitted

The Puerto Rico Energy Commission unveiled 29 pages of proposed regulations last week for future microgrid installations on the island.

The regulations, which are now open for 30 days of public comment, synthesized pages of responses received after a November 10 call for recommendations. Commission chair José Román Morales said it’s the most interest the not-yet four-year-old commission has received during a public rulemaking process.

The goal was to sketch a clearer outline for a tricky-to-define concept -- the term "microgrid" can refer to many types of generation islanded from the central grid -- as climate pressures on the U.S. grid mount and more developers eye installations on the recovering island.

“There’s not a standard definition of what a microgrid is, not even on the mainland,” said Román Morales.

According to the commission's regulation, “a microgrid shall consist, at a minimum, of generation assets, loads and distribution infrastructure. Microgrids shall include sufficient generation, storage assets and advanced distribution technologies, including advanced inverters, to serve load under normal operating and usage conditions.”

All microgrids must be renewable (with at least 75 percent of power from clean energy), combined heat and power (CHP) or hybrid CHP-and-renewable systems. The regulation applies to microgrids controlled and owned by individuals, customer cooperatives, nonprofit and for-profit companies, and cities, but not those owned by the Puerto Rico Electric Power Authority (PREPA). Owners must submit a registration application for approval, including a certification of inspection from a licensed electric engineer, and an annual fuel, generation and sales report that details generation and fuel source, as well as any change in the number of customers served.

Microgrids, like the SDG&E microgrid in Ramona in California, can interconnect with the PREPA system, but if a microgrid will use PREPA infrastructure, owners will incur a monthly fee. That amounts to $25 per customer up to a cap of $250 per month for small cooperative microgrids. The cost for larger systems is calculated using a separate, more complex equation. Operators can also sell excess energy back to PREPA.

Big goals for the island's future grid

In total, 53 groups and companies, including Sunnova, AES, the Puerto Rico Solar Energy Industries Association (PR-SEIA), the Advanced Energy Management Alliance (AEMA), and the New York Smart Grid Consortium, submitted their thoughts about microgrids or, in many cases, broader goals for the island’s future energy system. It was a quick turnaround: The Puerto Rico Energy Commission offered a window of just 10 days to submit advice, although the commission continued to accept comments after the deadline.

“PREC wanted the input as fast as possible because of the urgency,” said AES CEO Chris Shelton.

AES’ plan includes a network of “mini-grids” that could range in size from several megawatts to one large enough to service the entire city of San Juan.

“The idea is, you connect those to each other with transmission so they can have a co-optimized portfolio effect and lower the overall cost,” said Shelton. “But they would be largely autonomous in a situation where the tie-lines between them were broken.”

According to estimates provided in AES’ filing, utility-scale solar installations over 50 megawatts on the island could cost between $40 and $50 per megawatt-hour. Those prices make solar located near load centers an economic alternative to the island’s fossil-fuel generating plants. The utility’s analysis showed that a 10,000-megawatt solar system could replace 12,000 gigawatt-hours of fossil generation, with 25 gigawatt-hours of battery storage leveling out load throughout the day. Puerto Rico’s peak load is 3,000 megawatts.

In other filings, PR-SEIA urged a restructuring of FEMA funds so they’re available for microgrid development. GridWise Alliance wrote that plans should consider cybersecurity, and AEMA recommended the commission develop an integrated resource plan (IRP) that includes distributed energy resources, microgrids and non-wires alternatives.

An air of optimism, though 1.5 million are still without power

After the commission completes the microgrid rulemaking, a new IRP is next on the commission’s to-do list. PREPA must file that plan in July, and regulators are working furiously to make sure it incorporates the recent flood of rebuilding recommendations from the energy industry.

Though the commission has the final say when it comes to approval of the plan, PREPA will lead the IRP process. The utility’s newly formed Transformation Advisory Council (TAC), a group of 11 energy experts, will contribute.

With that group, along with New York’s Resiliency Working Group, lessons from California's grid transition, the Energy Commission, the utility itself, and the dozens of other clean energy experts and entrepreneurs who want to offer their two cents, the energy planning process has a lot of moving parts. But according to Julia Hamm, CEO of the Smart Electric Power Alliance and a member of both the Energy Resiliency Working Group and the TAC, those working to establish standards for Puerto Rico’s future are hitting their stride.

“Certainly over the past three months, it has been a bit of a challenge to ensure that everybody has been coordinating efforts. Just over the past couple of weeks, we’ve seen some good progress on that front. We’re starting to see a lot more communication,” she said, adding that an air of optimism has settled on the process. “The key stakeholders all have a very common vision for Puerto Rico when it comes to the power sector.”

Nisha Desai, a PREPA board member who is liaising with the TAC, affirmed that collaborators are on the same page. “Everyone is violently in agreement that the future of Puerto Rico involves renewables, microgrids and distributed generation,” she said.

The TAC will hold its first in-person meeting in mid-January, and has already consulted with the utility on its formal fiscal plan submission, due January 10.

Though many taking part in the process feel the once-harried recovery is beginning to adopt a more organized approach, Desai acknowledges that “there are a lot of people in Puerto Rico who feel forgotten.”

Puerto Rico’s current generation sits at just 72.6 percent, in a nation facing longer, more frequent outages due to extreme weather. The government recently offered its first estimate that about half the island, 1.5 million residents, remains without power.

In late December and into January, 1,500 more crewmembers from 18 utilities in states as far flung as Minnesota, Missouri and Arizona will land on the island to aid further restoration through mutual aid agreements.

“The system is getting up to speed, getting to 100 percent, but there’s still some instability,” said Román Morales. “Right now it’s a matter of time.”

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FPL Hurricane Surcharge explained: restoration costs, Florida PSC review, rate impacts, grid resilience, and transparency after Hurricanes Debby and Helene as FPL funds infrastructure hardening and rapid storm recovery across Florida.

Key Points

A fee by Florida Power & Light to recoup hurricane restoration costs, under Florida PSC review for consumer fairness.

✅ Funds Debby and Helene restoration, materials, and crews

✅ Reviewed by Florida PSC for consumer protection and fairness

✅ Raises questions on grid resilience, transparency, and renewables

In the aftermath of recent hurricanes, Florida Power & Light (FPL) is under scrutiny as it implements a rate surcharge, alongside proposed rate hikes that span multiple years, to help cover the costs of restoration and recovery efforts. The surcharges, attributed to Hurricanes Debby and Helene, have stirred significant debate among consumers and state regulators, highlighting the ongoing challenges of hurricane preparedness and response in the Sunshine State.

Hurricanes are a regular threat in Florida, and FPL, as the state's largest utility provider, plays a critical role in restoring power and services after such events. However, the financial implications of these natural disasters often leave residents questioning the fairness and necessity of additional charges on their monthly bills. The newly proposed surcharge, which is expected to affect millions of customers, has ignited discussions about the adequacy of the company’s infrastructure investments and its responsibility in disaster recovery.

FPL’s decision to implement a surcharge comes as the company faces rising operational costs due to extensive damage caused by the hurricanes. Restoration efforts are not only labor-intensive but also require significant investment in materials and equipment to restore power swiftly and efficiently. With the added pressures of increased demand for electricity during peak hurricane seasons, utilities like FPL must navigate complex financial landscapes, similar to Snohomish PUD's weather-related rate hikes seen in other regions, while ensuring reliable service.

Consumer advocacy groups have raised concerns over the timing and justification for the surcharge. Many argue that frequent rate increases following natural disasters can strain already financially burdened households, echoing pandemic-related shutoff concerns raised during COVID that heightened energy insecurity. Florida residents are already facing inflationary pressures and rising living costs, making additional surcharges particularly difficult for many to absorb. Critics assert that utility companies should prioritize transparency and accountability, especially when it comes to costs incurred during emergencies.

The Florida Public Service Commission (PSC), which regulates utility rates and services, even as California regulators face calls for action amid soaring bills elsewhere, is tasked with reviewing the surcharge proposal. The commission’s role is crucial in determining whether the surcharge is justified and in line with the interests of consumers. As part of this process, stakeholders—including FPL, consumer advocacy groups, and the general public—will have the opportunity to voice their opinions and concerns. This input is essential in ensuring that the commission makes an informed decision that balances the utility’s financial needs with consumer protection.

In recent years, FPL has invested heavily in strengthening its infrastructure to better withstand hurricane impacts. These investments include hardening power lines, enhancing grid resilience, and implementing advanced technologies for quicker recovery, with public outage prevention tips also promoted to enhance preparedness. However, as storms become increasingly severe due to climate change, the question arises: are these measures sufficient? Critics argue that more proactive measures are needed to mitigate the impacts of future storms and reduce the reliance on post-disaster rate increases.

Additionally, the conversation around climate resilience is becoming increasingly prominent in discussions about energy policy in Florida. As extreme weather events grow more common, utilities are under pressure to innovate and adapt their systems. Some experts suggest that FPL and other utilities should explore alternative strategies, such as investing in decentralized energy resources like solar and battery storage, even as Florida declined federal solar incentives that could accelerate adoption, which could provide more reliable service during outages and reduce the overall strain on the grid.

The issue of rate surcharges also highlights a broader conversation about the energy landscape in Florida. With a growing emphasis on renewable energy and sustainability, consumers are becoming more aware of the environmental impacts of their energy choices, and some recall a one-time Gulf Power bill decrease as an example of short-term relief. This shift in consumer awareness may push utilities like FPL to reevaluate their business models and explore more sustainable practices that align with the public’s evolving expectations.

As FPL navigates the complexities of hurricane recovery and financial sustainability, the impending surcharge serves as a reminder of the ongoing challenges faced by utility providers in a climate-volatile world. While the need for recovery funding is undeniable, the manner in which it is implemented and communicated will be crucial in maintaining public trust and ensuring fair treatment of consumers. As discussions unfold in the coming weeks, all eyes will be on the PSC’s decision and FPL’s approach to balancing recovery efforts with consumer affordability.

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U.S. power grid cyberattacks expose critical infrastructure to Russian hackers, DHS warns, targeting SCADA, smart grid sensors, and utilities; NERC CIP defenses, microgrids, and resilience planning aim to mitigate outages and supply chain disruptions.

Key Points

U.S. power grid cyberattacks target utility control systems, risking outages, disruption, requiring stronger defenses.

✅ Russian access to utilities and SCADA raises outage risk

✅ NERC CIP, DHS, and utilities expand cyber defenses

✅ Microgrids and renewables enhance resilience, islanding capability

The U.S. Department of Homeland Security has revealed that Russian government hackers accessed control rooms at hundreds of U.S. electrical utility companies, gaining far more access to the operations of many more companies than previously disclosed by federal officials.

Securing the electrical grid, upon which is built almost the entirety of modern society, is a monumental challenge. Several experts have explained aspects of the task, potential solutions and the risks of failure for The Conversation:

1. What’s at stake?

The scale of disruption would depend, in part, on how much damage the attackers wanted to do. But a major cyberattack on the electricity grid could send surges through the grid, much as solar storms have done.

Those events, explains Rochester Institute of Technology space weather scholar Roger Dube, cause power surges, damaging transmission equipment. One solar storm in March 1989, he writes, left “6 million people without power for nine hours … [and] destroyed a large transformer at a New Jersey nuclear plant. Even though a spare transformer was nearby, it still took six months to remove and replace the melted unit.”

More serious attacks, like larger solar storms, could knock out manufacturing plants that build replacement electrical equipment, gas pumps to fuel trucks to deliver the material and even “the machinery that extracts oil from the ground and refines it into usable fuel. … Even systems that seem non-technological, like public water supplies, would shut down: Their pumps and purification systems need electricity.”

In the most severe cases, with fuel-starved transportation stalled and other basic infrastructure not working, “[p]eople in developed countries would find themselves with no running water, no sewage systems, no refrigerated food, and no way to get any food or other necessities transported from far away. People in places with more basic economies would also be without needed supplies from afar.”

2. It wouldn’t be the first time

Russia has penetrated other countries’ electricity grids in the past, and used its access to do real damage. In the middle of winter 2015, for instance, a Russian cyberattack shut off the power to Ukraine’s capital in the middle of winter 2015.

Power grid scholar Michael McElfresh at Santa Clara University discusses what happened to cause hundreds of thousands of Ukrainians to lose power for several hours, and notes that U.S. utilities use software similar to their Ukrainian counterparts – and therefore share the same vulnerabilities.

3. Security work is ongoing

These threats aren’t new, write grid security experts Manimaran Govindarasu from Iowa State and Adam Hahn from Washington State University. There are a lot of people planning defenses, including the U.S. government, as substation attacks are growing across the country. And the “North American Electric Reliability Corporation, which oversees the grid in the U.S. and Canada, has rules … for how electric companies must protect the power grid both physically and electronically.” The group holds training exercises in which utility companies practice responding to attacks.

4. There are more vulnerabilities now

Grid researcher McElfresh also explains that the grid is increasingly complex, with with thousands of companies responsible for different aspects of generating, transmission, and delivery to customers. In addition, new technologies have led companies to incorporate more sensors and other “smart grid” technologies. He describes how that, as a recent power grid report card underscores, “has created many more access points for penetrating into the grid computer systems.”

5. It’s time to ramp up efforts

The depth of access and potential control over electrical systems means there has never been a better time than right now to step up grid security amid a renewed focus on protecting the grid among policymakers and utilities, writes public-utility researcher Theodore Kury at the University of Florida. He notes that many of those efforts may also help protect the grid from storm damage and other disasters.

6. A possible solution could be smaller grids

One protective effort was identified by electrical engineer Joshua Pearce at Michigan Technological University, who has studied ways to protect electricity supplies to U.S. military bases both within the country and abroad. He found that the Pentagon has already begun testing systems, as the military ramps up preparation for major grid hacks, that combine solar-panel arrays with large-capacity batteries. “The equipment is connected together – and to buildings it serves – in what is called a ‘microgrid,’ which is normally connected to the regular commercial power grid but can be disconnected and become self-sustaining when disaster strikes.”

He found that microgrid systems could make military bases more resilient in the face of cyberattacks, criminals or terrorists and natural disasters – and even help the military “generate all of its electricity from distributed renewable sources by 2025 … which would provide energy reliability and decrease costs, [and] largely eliminate a major group of very real threats to national security.”

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New York Solar Milestone accelerates renewable energy adoption, meeting targets early with 8,000 MW capacity powering 1.1 million homes, boosting green jobs, community solar, battery storage, and grid reliability under the CLCPA clean energy framework.

Key Points

It is New York achieving its solar goal early, powering 1.1M homes and advancing CLCPA renewable targets.

✅ 8,000 MW installed, enough to power about 1.1M homes

✅ CLCPA targets: 70 percent renewables by 2030

✅ Community solar, storage, and green jobs scaling statewide

In a remarkable display of commitment to renewable energy, New York has achieved its solar energy targets a year ahead of schedule, marking a significant milestone in the state's clean energy journey, and aligning with a national trend where renewables reached a record 28% in April nationwide. With the addition of solar power capacity capable of powering over a million homes, New York is not just setting the pace for solar adoption but is also establishing itself as a leader in the fight against climate change.

A Commitment to Renewable Energy

New York’s ambitious clean energy agenda is part of a broader effort to reduce greenhouse gas emissions and transition to sustainable energy sources. The state's goal, established under the Climate Leadership and Community Protection Act (CLCPA), aims for 70% of its electricity to come from renewable sources by 2030. With the recent advancements in solar energy, including contracts for 23 renewable projects totaling 2.3 GW, New York is well on its way to achieving that goal, demonstrating that aggressive policy frameworks can lead to tangible results.

The Numbers Speak for Themselves

As of now, New York has successfully installed more than 8,000 megawatts (MW) of solar energy capacity, supported by large-scale energy projects underway across New York that are expanding the grid. This achievement translates to enough electricity to power approximately 1.1 million homes, showcasing the state's investment in harnessing the sun’s power. The rapid expansion of solar installations reflects both increasing consumer interest and supportive policies that facilitate growth in the renewable energy sector.

Economic Benefits and Job Creation

The surge in solar energy capacity has not only environmental implications but also significant economic benefits. The solar industry in New York has become a substantial job creator, employing tens of thousands of individuals across various sectors. From manufacturing solar panels to installation and maintenance, the job opportunities associated with this growth are diverse and vital for local economies.

Moreover, as solar installations increase, the state benefits from reduced electricity costs over time. By investing in renewable energy, New York is paving the way for a more resilient and sustainable energy future, while simultaneously providing economic opportunities for its residents.

Community Engagement and Accessibility

New York's solar success is also tied to its efforts to engage communities and increase access to renewable energy. Initiatives such as community solar programs allow residents who may not have the means or space to install solar panels on their homes to benefit from solar energy. These programs provide an inclusive approach, ensuring that low-income households and underserved communities have access to clean energy solutions.

The state has also implemented various incentives to encourage solar adoption, including tax credits, rebates, and financing options. These efforts not only promote environmental sustainability but also aim to make solar energy more accessible to all New Yorkers, furthering the commitment to equity in the energy transition.

Innovations and Future Prospects

New York's solar achievements are complemented by ongoing innovations in technology and energy storage solutions. The integration of battery storage systems is becoming increasingly important, reflecting growth in solar and storage in the coming years, and allowing for the capture and storage of solar energy for use during non-sunny periods. This technology enhances grid reliability and supports the state’s goal of transitioning to a fully sustainable energy system.

Looking ahead, New York aims to continue this momentum. The state is exploring additional strategies to increase renewable energy capacity, including plans to investigate sites for offshore wind across its coastline, and other clean energy technologies. By diversifying its renewable energy portfolio, New York is positioning itself to meet and even exceed future energy demands while reducing its carbon footprint.

A Model for Other States

New York’s success story serves as a model for other states aiming to enhance their renewable energy capabilities, with its approval of the biggest offshore wind farm underscoring that leadership. The combination of strong policy frameworks, community engagement, and technological innovation can inspire similar initiatives nationwide. As more states look to address climate change, New York’s proactive approach can provide valuable insights into effective strategies for solar energy deployment.

New York’s achievement of its solar energy goals a year ahead of schedule is a testament to the state's unwavering commitment to sustainability and renewable energy. With the capacity to power over a million homes, this milestone not only signifies progress in clean energy adoption but also highlights the potential for economic growth and community engagement. As New York continues on its path toward a greener future, and stays on the road to 100% renewables by mid-century, it sets a powerful example for others to follow, proving that ambitious renewable energy goals can indeed become a reality.

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Northeast D.C. Power Outage highlights Pepco substation equipment failure, widespread service disruptions, grid reliability concerns, and restoration efforts, with calls for smart grid upgrades, better communication, and resilient infrastructure to protect residents, schools, and businesses.

Key Points

A Pepco substation failure caused outages, prompting restoration work and plans for smarter, resilient grid upgrades.

✅ Pepco cites substation equipment failure as root cause

✅ Crews prioritized rapid restoration and customer updates

✅ Calls grow for smart grid, resilience, and transparency

A recent power outage affecting Northeast Washington, D.C., has drawn attention to the vulnerabilities within the city’s energy infrastructure. The outage, caused by equipment failure at a Pepco substation, left thousands of residents in the dark and raised concerns about the reliability of electricity services in the area.

The Outage: What Happened?

On a typically busy weekday morning, Pepco, the local electric utility, reported significant power disruptions that affected several neighborhoods in Northeast D.C. Initial reports indicated that around 3,000 customers were without electricity due to issues at a nearby substation. The outages were widespread, impacting homes, schools, and businesses, and reflecting pandemic energy insecurity seen in many communities, creating a ripple effect of inconvenience and frustration.

Residents experienced not only the loss of power but also disruptions in daily activities. Many were unable to work from home, students faced challenges with remote learning, and businesses had to close or operate under limited conditions. The timing of the outage further exacerbated the situation, as it coincided with a period of increased demand for electricity, making efforts to prevent summer outages even more crucial for residents and businesses.

Community Response

In the wake of the outage, local community members and leaders quickly mobilized to assess the situation. Pepco crews were dispatched to restore power as swiftly as possible, but residents were left grappling with the immediate consequences. Local organizations and community leaders stepped in to provide support, especially as extreme heat can exacerbate electricity struggles for vulnerable households, offering resources such as food and shelter for those most affected.

Social media became a vital tool for residents to share information and updates about the situation. Many took to platforms like Twitter and Facebook to report their experiences and seek assistance. This grassroots communication helped keep the community informed and fostered a sense of solidarity during the disruption.

The Utility's Efforts

Pepco’s response involved not only restoring power but also addressing the underlying issues that led to the outage. The utility company communicated its commitment to investigating the cause of the equipment failure and ensuring that similar incidents would be less likely in the future. As part of this commitment, Pepco outlined plans for infrastructure upgrades, despite supply-chain constraints facing utilities nationwide, aimed at enhancing reliability across its service area.

Moreover, Pepco emphasized the importance of communication during outages. The company has been working to improve its notification systems, ensuring that customers receive timely updates about outages and restoration efforts. Enhanced communication can help mitigate the frustration experienced during such events and keep residents informed about when they can expect power to be restored.

Broader Implications for D.C.'s Energy Infrastructure

This recent outage has sparked a larger conversation about the resilience of Washington, D.C.’s energy infrastructure. As the city continues to grow and evolve, the demand for reliable electricity is more critical than ever. Frequent outages can undermine public confidence in utility providers and highlight the need for ongoing investment in infrastructure amid an aging U.S. grid that complicates renewable deployment and EV adoption across the country.

Experts suggest that to ensure a more reliable energy supply, utilities must embrace modernization efforts, including the integration of smart grid technology and renewable energy sources. These innovations can enhance the ability to manage electricity supply and demand, especially during unprecedented demand in the Eastern U.S. when heatwaves strain systems, reduce outages, and improve response times during emergencies.

The Path Forward

In response to the outage, community advocates are calling for greater transparency from Pepco and other utility companies. They emphasize the importance of holding utilities accountable for maintaining reliable service and communicating effectively with customers, while also promoting customer bill-reduction initiatives that help households manage costs. Public forums and discussions about energy policy can empower residents to voice their concerns and contribute to solutions.

As D.C. looks to the future, it is essential to prioritize investments in energy infrastructure that can withstand the demands of a growing population. Collaborations between local government, utility companies, and community organizations can drive initiatives aimed at enhancing resilience and ensuring that all residents have access to reliable electricity.

The recent power outage in Northeast D.C. serves as a reminder of the challenges facing urban energy infrastructure. While Pepco's efforts to restore power and improve communication are commendable, the incident highlights the need for long-term solutions to enhance reliability. By investing in modern technology and fostering community engagement, D.C. can work towards a more resilient energy future, ensuring that residents can count on their electricity service even in times of crisis.

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US Electricity Demand Stagnation reflects decoupling from GDP as TVA's IRP revises outlook, with energy efficiency, distributed generation, renewables, and cheap natural gas undercutting coal, reshaping utility business models and accelerating grid modernization.

Key Points

US electricity demand stagnation is flat load growth driven by efficiency, DG, and decoupling from GDP.

✅ Flat sales pressure IOU profits and legacy baseload investments.

✅ Efficiency and rooftop solar reduce load growth and capacity needs.

✅ Utilities must pivot to services, DER orchestration, and grid software.

The US electricity sector is in a period of unprecedented change and turmoil, with emerging utility trends reshaping strategies across the industry today. Renewable energy prices are falling like crazy. Natural gas production continues its extraordinary surge. Coal, the golden child of the current administration, is headed down the tubes.

In all that bedlam, it’s easy to lose sight of an equally important (if less sexy) trend: Demand for electricity is stagnant.

Thanks to a combination of greater energy efficiency, outsourcing of heavy industry, and customers generating their own power on site, demand for utility power has been flat for 10 years, with COVID-19 electricity demand underscoring recent variability and long-run stagnation, and most forecasts expect it to stay that way. The die was cast around 1998, when GDP growth and electricity demand growth became “decoupled”:

This historic shift has wreaked havoc in the utility industry in ways large and small, visible and obscure. Some of that havoc is high-profile and headline-making, as in the recent requests from utilities (and attempts by the Trump administration) to bail out large coal and nuclear plants amid coal and nuclear industry disruptions affecting power markets and reliability.

Some of it, however, is unfolding in more obscure quarters. A great example recently popped up in Tennessee, where one utility is finding its 20-year forecasts rendered archaic almost as soon as they are released.

Falling demand has TVA moving up its planning process

Every five years, the Tennessee Valley Authority (TVA) — the federally owned regional planning agency that, among other things, supplies electricity to Tennessee and parts of surrounding states — develops an Integrated Resource Plan (IRP) meant to assess what it requires to meet customer needs for the next 20 years.

The last IRP, completed in 2015, anticipated that there would be no need for major new investment in baseload (coal, nuclear, and hydro) power plants; it foresaw that energy efficiency and distributed (customer-owned) energy generation would hold down demand.

Even so, TVA underestimated. Just three years later, the Times Free Press reports, “TVA now expects to sell 13 percent less power in 2027 than it did two decades earlier — the first sustained reversal in the growth of electricity usage in the 85-year history of TVA.”

TVA will sell less electricity in 10 years than it did 10 years ago. That is bonkers.

This startling shift in prospects has prompted the company to accelerate its schedule. It will now develop its next IRP a year early, in 2019.

Think for a moment about why a big utility like TVA (serving 9 million customers in seven states, with more than $11 billion in revenue) sets out to plan 20 years ahead. It is investing in extremely large and capital-intensive infrastructure like power plants and transmission lines, which cost billions of dollars and last for decades. These are not decisions to make lightly; the utility wants to be sure that they will still be needed, and will still pay off, for many years to come.

Now think for a moment about what it means for the electricity sector to be changing so fast that TVA’s projections are out of date three years after its last IRP, so much so that it needs to plunge back into the multimillion-dollar, year-long process of developing a new plan.

TVA wanted a plan for 20 years; the plan lasted three.

The utility business model is headed for a reckoning

TVA, as a government-owned, fully regulated utility, has only the goals of “low cost, informed risk, environmental responsibility, reliability, diversity of power and flexibility to meet changing market conditions,” as its planning manager told the Times Free Press. (Yes, that’s already a lot of goals!)

But investor-owned utilities (IOUs), which administer electricity for well over half of Americans, face another imperative: to make money for investors. They can’t make money selling electricity; monopoly regulations forbid it, raising questions about utility revenue models as marginal energy costs fall. Instead, they make money by earning a rate of return on investments in electrical power plants and infrastructure.

The problem is, with demand stagnant, there’s not much need for new hardware. And a drop in investment means a drop in profit. Unable to continue the steady growth that their investors have always counted on, IOUs are treading water, watching as revenues dry up

Utilities have been frantically adjusting to this new normal. The generation utilities that sell into wholesale electricity markets (also under pressure from falling power prices; thanks to natural gas and renewables, wholesale power prices are down 70 percent from 2007) have reacted by cutting costs and merging. The regulated utilities that administer local distribution grids have responded by increasing investments in those grids, including efforts to improve electricity reliability and resilience at lower cost.

But these are temporary, limited responses, not enough to stay in business in the face of long-term decline in demand. Ultimately, deeper reforms will be necessary.

As I have explained at length, the US utility sector was built around the presumption of perpetual growth. Utilities were envisioned as entities that would build the electricity infrastructure to safely and affordably meet ever-rising demand, which was seen as a fixed, external factor, outside utility control.

But demand is no longer rising. What the US needs now are utilities that can manage and accelerate that decline in demand, increasing efficiency as they shift to cleaner generation. The new electricity paradigm is to match flexible, diverse, low-carbon supply with (increasingly controllable) demand, through sophisticated real-time sensing and software.

That’s simply a different model than current utilities are designed for. To adapt, the utility business model must change. Utilities need newly defined responsibilities and new ways to make money, through services rather than new hardware. That kind of reform will require regulators, politicians, and risky experiments. Very few states — New York, California, Massachusetts, a few others — have consciously set off down that path.

Flat or declining demand is going to force the issue

Even if natural gas and renewables weren’t roiling the sector, the end of demand growth would eventually force utility reform.

To be clear: For both economic and environmental reasons, it is good that US power demand has decoupled from GDP growth. As long as we’re getting the energy services we need, we want overall demand to decline. It saves money, reduces pollution, and avoids the need for expensive infrastructure.

But the way we’ve set up utilities, they must fight that trend. Every time they are forced to invest in energy efficiency or make some allowance for distributed generation (and they must always be forced), demand for their product declines, and with it their justification to make new investments.

Only when the utility model fundamentally changes — when utilities begin to see themselves primarily as architects and managers of high-efficiency, low-emissions, multidirectional electricity systems rather than just investors in infrastructure growth — can utilities turn in earnest to the kind planning they need to be doing.

In a climate-aligned world, utilities would view the decoupling of power demand from GDP growth as cause for celebration, a sign of success. They would throw themselves into accelerating the trend.

Instead, utilities find themselves constantly surprised, caught flat-footed again and again by a trend they desperately want to believe is temporary. Unless we can collectively reorient utilities to pursue rather than fear current trends in electricity, they are headed for a grim reckoning.

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