Can Charlotte find the right energy mix?

Study committee formed

From the Charlotte Business Journal : the-right-energymix.html

John Downey

Senior Staff Writer- Charlotte Business Journal

Many experts forecast the end of the business model that fuels utilities in a coming technological sea change. Ronak Bhatt of consulting firm RIN Advisors wants to figure out what the new model looks like.

He led the organization of the 12-member Utility of the Future steering committee sponsored by E4 Carolinas and UNC Charlotte’s Energy Production and Infrastructure Center. The group will have its first meeting Jan. 31. Within a year, Bhatt says, it hopes to have detailed recommendations to present to North Carolina’s reconstituted Energy Policy Council, regulators and legislators in the Carolinas.

While much of the current discussion focuses on immediate solar energy issues, Bhatt’s group wants a much broader look. Technologies from battery storage and energy efficiency, in the near term, to electric vehicles, grid modernization, fuel cells and wind power, in the long term, will challenge the industry during the next 10 years. “Solar’s just the beginning of a wave of technologies that will have a complex interplay,” says Bhatt, who was the principal author of the 2011 McKinsey & Co. report that led to establishment of E4 Carolinas, serves on the E4 board and is an associate professor at EPIC.

“Let’s not come up with a solution that patches the system for two years, and then we have to rethink things when there is another technology.”

The financial model for generating and distributing electric power has worked for more than 50 years, he notes. “We want to get a system that works for the next 50.” If the existing business model — dictated largely by regulatory requirements — doesn’t change, some classes of customers will start feeling “significant pain” as utility costs fall more heavily on customers who can’t or don’t take advantage of energy alternatives, he says.

In the long term, the model will create problems for the utilities as well. Bhatt hopes that settling issues now — exploring options such as rate structures that separate operational costs and fixed costs and determining how to value renewable sources — will avoid fights among interest groups.

Bhatt has been at the center of energy issues in the Charlotte region for several years. In his previous job with McKinsey & Co., he was the principal author of the report that led to establishment of E4 Carolinas in 2012 to promote the Carolinas energy hub.

The steering committee is made up of economists, energy executives, former regulators and representatives of the renewables industry. Raleigh and Charlotte are heavily represented. Duke Energy’s chief innovation officer, Lee Mazzocchi; Advanced Energy President Bob Koger, a former chairman of the N.C. Utilities Commission; and Holocene Clean Energy CEO Ralph Thompson are on the roster. But the group also includes Richard Newell, director of the Duke University Energy Initiative, and David Wright, president of the Columbia, S.C., energy consulting firm Wright Directions and a former chairman of the S.C. Public Service Commission.

It took about six months to put the roster together, Bhatt says.

The remaining members are Jeffrey Barghout, vice president of transportation initiatives at Advanced Energy; Kiran Mehta, a partner in K&L Gates’ Charlotte office, who represents utilities to regulatory boards; Peter Schwarz, UNC Charlotte professor of economics and an associate at EPIC; Robert Schwentker, general counsel for the N.C. Electric Membership Corp. and chief operating officer of its GreenCo Solutions; Tom Shircliff, principal at Intelligent Buildings and chairman of Envision: Charlotte; and Ivan Urlaub, executive director of the N.C Sustainable Energy Association.

John Downey covers the energy industry and public companies for the Charlotte Business Journal.