Exelon: The Utility of the Future Views Change as Enabling, Not Disruptive

Integrating more variable generation and storage, but no new nuclear units, are among the characteristics Exelon sees in the utility of the future, as outlined by Chief Strategy Officer William A. Von Hoene Jr. at the MIT Energy Conference, held Feb. 27-28. He began his Saturday address by saying that innovation is "absolutely indispensible."

William A. Von Hoene Jr., Chief Stratey Officer, Exelon Corp., spoke at the 10th MIT Energy Conference on Feb. 28. Courtesy: POWER/Gail Reitenbach

Old, regulated utilities had little reason to innovate, he noted, but major shifts are forcing changes in business as usual. Macro shifts-hydraulic fracturing and the natural gas boom it enabled in the U.S., slow load growth, the need for carbon reduction, and increasing water concerns-plus technology shifts-renewables and distributed generation, smart grid technologies, plus efficiency and beyond-the-meter components-already are affecting utilities.

Von Hoene's keynote address on "Building the Utility of the Future" echoed the company's general attitude, as expressed by CEO Christopher M. Crane, that there is no disruptive technology-we must see them as enabling, Von Hoene said. What that means, at least for Exelon, is that the utility:

• Is forward-looking rather than reactive.
• Identifies and seizes on trends early.
• Encourages innovation in the business.
• Invests in emerging technologies.

Among the ways Exelon is acting on these principles are investments in batteries and fuel cells. In fact, Von Hoene sees storage as the next breakthrough technology, just as fracking has been for resource recovery.

Exelon, which is the largest U.S. competitive power provider and the leading nuclear generator, also is the 10th-largest U.S. wind generator, is in the rooftop solar business, supports energy efficiency, and believes the best approach is an "all of the above" portfolio. The value of that approach has immediate import for Exelon, whose nuclear fleet has been challenged by low natural gas prices and what Von Hoene described as "market flaws" that don't properly value the low-carbon nature of nuclear power.

In the question and answer period, when asked about the outlook for new nuclear innovation, Von Hoene replied that, although Exelon is looking at small modular technology, the company doesn't envision a new nuclear unit being built in the U.S. because of the high capital cost and the current regulatory environment.

"An intelligent grid requires intelligent policy," he said. That comment was made in the context of his observation that three of the company's six nuclear plants in Illinois are at risk of closing because of the current economics of power generation.

Despite challenges on the nuclear side, size and the company's integrated business model-encompassing generation, competitive energy sales, transmission, and delivery-gives it scale. "There is power in scale," he said, to incorporate new technologies. As an example, he said Exelon has partnered with Bloom Energy to place fuel cells in 75 commercial facilities in a first-of-a-kind partnership.

Exelon is planning to add to its scale and is in the process of purchasing Pepco Holdings. In the Q and A period, an attendee asked if DTE Energy would be next. Von Hoene, a seasoned lawyer, deflected the question.

Although the presentation emphasized the ways in which Exelon is changing, Von Hoene also commented that transformation of the grid requires balance and can't be revolutionary if the basic need for reliability is considered. One also can't follow trends "blindly." The bottom line, though, is that utilities and the central grid will "coexist" with renewables and distributed generation.

The utility of the future is "dramatically different" than the traditional utility, Von Hoene concluded, adding that he hasn't ever been more excited about the industry, because of the opportunities facing utilities, society, and institutions like MIT.

-Gail Reitenbach, PhD, Editor (@GailReit, @POWERmagazine)

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