Understanding the Current State of the Energy Transition in the U.S.

Fueled by lower cost of renewables, consumer demand and an increase in environmental mandates, the energy transition is upon us. Utilities are embracing the shift from fossil fuels to renewable energy, but significant barriers block the path forward. 
 
This year, our Resourcefulness Insight Report examines the view of the energy transition among utility executives and state utility commissioners in the U.S., including the barriers they see coming and how they expect to meet those hurdles head on. The state of the grid is shifting; the majority of the electric grid (70%) is more than 25 years old and was built mainly for one-way transmission of energy, but electricity delivery is now much more complex. The average American household has 22 connected devices powered by the aging electrical grid. 

This reliance on the grid alongside widespread electrification efforts and distributed energy generation has highlighted the need for more grid capacity and flexibility. This raises many crucial questions, such as: what are the barriers to success, and how can utilities lay the groundwork for the energy transition that is already underway?
 
We set out to explore this topic in our 10th Resourcefulness Insight Report, "Powering the Energy Transition: Insights from Utilities and Commissioners on Creating the Future U.S. Grid," which was released last week at Itron Inspire 2023. The 2023 Resourcefulness Insight Report summarizes key findings from a commissioned independent research survey of 250 U.S. utility executives and 10 state public utility commissioners on topics relating to the energy transition.

Nearly nine out of 10 (88%) utility executives surveyed view the switch from fossil fuel sources to renewables as very or extremely important, but more than half (55%) have not begun their implementation strategy. The question becomes, what do utility executives and commissioners view as the barriers to success that must be considered during strategy implementation?

• Utility Executives:
  • 50% list infrastructure updates and grid modernization as the top barrier, recognizing that it is nearly impossible to usher in a new energy future while relying on an old grid.
  • In a tie for second place, the regulatory approval process and a lack of funding for upfront investment are named as prominent barriers by 38% of utility executives surveyed.
  • In third place, 35% name reliability and resilience concerns as a top roadblock.

• Utility Commissioners:
  • 50% list affordability/economics as the largest barrier that utilities face, recognizing that upfront costs of new investments may factor in, as well as supply chain issues and inflation-related challenges.
  • In yet another tie for second place, infrastructure siting and interconnection/transmission are major obstacles for 40% of Commissioners surveyed.
  • Regulators and utilities share a top obstacle of reliability and resilience concerns, with 30% of commissioners listing this as a barrier. 

So, what is the most effective way to overcome these barriers? Utilities share these top three tactics:

1.Invest in technology and infrastructure to integrate renewables (41%)
2.Educate and advocate for clean energy policies with regulators and policy makers (38%)
3.Educate ratepayers about clean energy and efficiency (30%)

Most utilities agree that the energy transition is crucial and the precise nature of the transitioned grid is still forming. Utilities can start by taking stock of where they currently are, looking toward building their foundation for the transition, reevaluating business opportunities, presenting the strongest business case to regulators and working with partners to help accelerate the energy transition. The role of education in this can’t be overestimated; by educating consumers, policymakers and regulators about clean energy, conservation and energy management programs, utilities can help overcome these challenges.

For greater insights into the energy transition, including trends, obstacles and customer examples, download a copy of Itron's 2023 Resourcefulness Report and associated research at www.itron.com/rir.