Utilities in North America are facing an aging problem on two fronts: aging infrastructure and an aging workforce. Can a new generation of entrepreneurs and engineers help utilities address both?
The Canadian Electricity Association estimates Canada will need to spend nearly $294 billion by 2030 to upgrade old equipment and accommodate more distributed resources. The American Society of Civil Engineers says the U.S. needs a $94-billion upgrade by 2020 in order to modernize its grid. Meanwhile, in both countries, more than half of the utility workforce is nearing retirement age.
In a positive sign for utilities, a growing number of “Millennials” are moving into the electric sector. Interested in addressing the complex challenges of decarbonization, grid resiliency and distributed energy integration, these young entrepreneurs and engineers are bringing new ways of thinking to a sector undergoing seismic changes.
That’s where a startup like eRespond comes in. Founded by three students at University of Southern California’s Marshall School of Business, the company is developing a software platform that combines drone technology and social media aggregation to pinpoint outages quickly and manage the grid more effectively.
Many power companies use social media as a one-way communications tool to tell customers about outages; eRespond wants to use it as a way to identify the outages themselves. “Everyone is carrying a smart phone and using these outlets; yet very few are trying to create a centralized engagement platform for them,” said Payam Yeganeh, a master’s student at Marshall and one of eRespond’s co-founders.
The software analyzes all texts, emails, social media messages and telephone calls coming into a utility in order to gain insights into where outages are occurring, and then communicates targeted messages back to customers. The tool also analyzes images from unmanned aerial vehicles (drones) and compares them to messages from the field. In theory, it could be used by utilities with limited advanced metering infrastructure.
“There’s been a lack of solutions in the space. The more we look at it, the more we realize it’s needed. Social media today is not effectively used at all as a two-way communications channel. We enable that,” said Yeganeh, who worked in the utility sector for a decade before enrolling in graduate studies.
The idea emerged from student competition run by the non-profit business incubator Spark Clean Energy, based out of Chicago, Illinois. The competition, supported by the U.S. Department of Energy’s innovation arm, ARPA-E, identified grid management problems faced by utilities and then challenged graduate students to create the solutions. First place went to eRespond, giving it the chance to validate its software with ComEd and Exelon, two major U.S. utilities.
If it gains traction, eRespond would come into a crowded market where big grid engineering firms such as ABB, GE and Siemens are developing products designed to tie meters, outage management systems and social media together to boost grid resilience. But utility adoption has been modest so far, and no single company has market dominance.
Mark Silberg, executive director of Spark Clean Energy, believes there are lots of ideas brewing among young business leaders that could change energy markets. He compared the competition to the XPrize, which puts aside monetary rewards for entrepreneurs to solve “unsolvable” challenges.
“There are a lot of ideas incubating outside traditional businesses. Our role is to democratize access to these resources and pull in new talent,” said Silberg.
Spark has supported numerous other student-led startups addressing similar challenges, including rare earth recycling, realtime residential energy analytics, and a completely new control infrastructure designed to decentralize the grid.
This type of competition is not just beneficial for funding new ideas, it’s also important for attracting the next generation of talent for utilities shedding legacy workers.
In a 2013 report on the changing utility landscape, the consultancy PwC outlined the importance of hiring younger workers, who “tend to be more tech savvy” and bring new ideas for building smart grid infrastructure and deploying renewable energy.
“A rapidly evolving workforce is re-shaping the risk profiles of America’s power and utilities,” wrote the PwC analysts. “One possible solution: a more systematic approach to capturing and keeping core know-how – and new ways of transmitting that knowledge to a younger generation.”
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