Last week, we published the first part of our conversation with Michael O'Donnell, National Vice President of the Utilities Industry for SAP. The second part of our discussion, Michael goes into the importance of a resilient, secure power grid, and how utilities organizations in the United States are preparing for future regulations.
Q: What do you think are the biggest sustainability challenges that utilities customers are dealing with right now?
A: There are a few. A big one is resiliency. I think a lot of things are done under the guise of needing to be resilient and having a secure and resilient grid. When you start to bring up the top five things that are important to organizations right now, sustainability is up there. But I can guarantee you security and grid resiliency are more of a priority than sustainability. A lot of times, grid security and resiliency are used as the reason to not move as quickly. And of course, we need to be thoughtful about how we think about the future of the grid--because if you're just reacting to something and you're not thinking through all the downstream implications of a decision, you end up creating more issues down the line. But the danger is getting into the mode of analysis paralysis. You do have to move.
I think it's smart to think through this is the opportunity to restructure the entire grid in a way that allows for flexibility to accommodate sustainability innovations. Because they're going to happen. Making sure that the grid is resilient and people can get the energy they need is important.
And particularly when you consider security. “60 Minutes” recently covered the energy grid and its security. Someone in California shot up a substation. Officials don't know who it was. But these people cut the communications by strategically shooting certain parts of the substation to bring it down. If you take down a very specific set of substations, you can knock out huge swaths of the power grid. I only bring this up because organizations must account for grid security and resiliency as they are planning to drive sustainable solutions.
Energy grids need to be resilient, secure, and sustainable. But all those things have to be coupled together when you plug in new types of technology—whether they be wind, solar, hydrogen, or battery solutions. They all have to be interconnected and thought through.
Q: Let’s discuss regulations. When do you think we’ll start seeing significant regulations in the utilities space in North America?
A: We’ve already started to see some. The Biden administration has been trying to push some wholesale changes that have not garnered a lot of bipartisan support. It’s interesting because sustainability ends up getting lumped in with some other programs that I think are even more divisive among the two political parties in the United States. Sustainability is a topic where these political parties probably could agree if they looked at it separately.
But regardless, sustainability is not going away. You're seeing a lot of organizations, commercially, that aren't beholden to government regulations just make sustainability decisions on their own. You also see sustainability action at the state level. Certain states are more progressive and they've made decisions to drive a cleaner grid. You're seeing the net results of those state decisions being made and having that impact.
When thinking about Europe, I would say they're ahead. But the United States is such a huge country. California has the world's ninth-largest economy. A lot is also happening in the Southeast. I think there are regional reasons for that—having an abundance of sunlight doesn't hurt. But there's a lot of movement going on in different parts of the country.
Q: How are American utilities organizations preparing for what I can assume are going to be inevitable sustainability regulations coming their way?
A: It’s something they are considering. As I said, this is somewhat regional in nature, but everybody is moving in that direction and they've made their proclamations about when they're going to try to drive down to zero. Then there are those more strategic long-term points about making big investments in "clean hydrogen." A lot of the gas companies are focused on injecting hydrogen into natural gas to make it greener.
It depends on where you are in the country, but there are other things such as how you mix solar into your overall energy generation mix. And the same thing goes with wind power. For example, we have a huge development project going up the coast of New Jersey that's been going on for several years.
We’re also seeing more micronuclear organizations such as Bill Gate’s TerraPower or XPower. Jeff Bezos also has that company that does coal fusion. There are also a ton of battery technology companies out there. We're seeing a lot of investment around these solutions. It's happening in a lot of different areas to drive utilities organizations forward to hit those requirements they're trying to hit.
Q: In your opinion, what is the most exciting part of the sustainability efforts happening in the utilities industry right now?
A: I've worked in this industry for over 20 years. For a large period of that time, there wasn't a ton of innovation on the actual generation side of the mix and driving clean energy. The exciting part is that I'm going to be helping fundamentally transform the utilities industry in the next decade. Things will not look the same a decade from now. Being part of that evolution to help our customers in that process of driving down to carbon-neutral and creating a grid that is sustainable and resilient is very exciting to me.