Brattle Experts Outline “Clean Capital Efficiency” Approach for Electric Utilities to Navigate Industry Challenges in New Whitepaper
After two decades of relative stability, the electric utility industry has entered a turbulent new era. High inflation, supply chain constraints, and aging infrastructure – among other factors – have driven significant rate increases, while utility financial performance has declined and emissions reductions have plateaued. These challenges coincide with a massive revival of electric demand growth, creating unusually long and large connection delays.
In a new whitepaper, Brattle energy experts – including Principals Peter Fox-Penner and Ryan Hledik, Energy Specialist Xander Bartone, and Energy Analyst Shannon Paulson – propose a strategic framework for distribution utilities to navigate this rapid growth and host of challenges, which are only expected to escalate in the coming years. Their approach, called clean capital efficiency (CCE), emphasizes minimizing costly new infrastructure by maximizing the use of existing systems. Doing so can help utilities pursue financially stable growth, rate moderation, and decarbonization simultaneously.
To implement CCE, the authors recommend a suite of strategies alongside system expansion: revised energy efficiency programs, accelerated demand flexibility programs, optimizing and possibly owning distributed energy resources, low-capital transmission expansion technologies, and leveraging off-balance sheet capital sources. While none of these strategies are new, the authors argue they all deserve a stronger emphasis in the coming era. They also explore the process challenges associated with each strategy.
The paper, “Affordability, Rates, and Clean Capital Efficiency: A Path for the Power Industry’s Turbulent Next Decade,” is available below.
