Between the two of them, Fred Beach and Roger Duncan, researchers in UT Austin’s Energy Institute, have more than 40 years’ experience in the energy world. So who do they turn to for a thoughtful, informed analysis of what the electric utility of the future might look like?
A handful of twenty-something students, of course.
Beach, an assistant director for policy studies at the Institute, also teaches courses in energy technology and policy. He also co-hosts the Institute’s popular weekly guest lecture series, the UT Energy Symposium, and frequently is called upon by journalists to provide expert analysis on an array of topical energy issues. Several years ago, Beach returned to academia following a 25-year career in the U.S. Navy to earn his Ph.D. from the LBJ School of Public Affairs.
Duncan, an Institute Research Fellow and Research Associate at the Center for International Energy and Environmental Policy, for years was general manager of the City of Austin’s electric utility, Austin Energy. He went on to serve two terms on the City Council and was widely recognized as its go-to energy expert. These days, Duncan is known as an energy ‘futurist’ due to his forward-thinking research and analysis into emerging trends.
Earlier this year, the two men, part of a team of researchers involved in the Energy Institute’s latest research project, an interdisciplinary study titled The Full Cost of Electricity (FCe-), realized they needed some help. Missing from the dozen or so white papers the team had commissioned from researchers across campus was an assessment of what the electric utility industry has evolved, and what the business model of the utility of future might look like.
With Beach and Duncan leading the way, the Institute decided to sponsor a Policy Research Project (PRP) at the LBJ School. Students enrolled in the two-year graduate public affairs program are required to participate in at least one PRP to complete their master’s degree. Subject matter for the PRPs run the gamut – from technology entrepreneurship in East Africa to water quality management along the Rio Grande; from an assessment of veterans’ mental health services to an examination of women and politics in executive branches of government throughout the Americas.
“Funding this PRP through the Energy Institute, as part of the Full Cost of Electricity study, was just a natural fit,” Beach says.
The FCe- study employs a holistic approach to thoroughly examine the key factors affecting the total direct and indirect costs of generating and delivering electricity. An interdisciplinary project, researchers are synthesizing expert analyses and varying perspectives from faculty across the UT Austin campus, including those representing engineering, economics, law, and policy.
Given the transformative changes underway within the industry, it was not only a sensible question to ask, Beach and Duncan note, but an essential one, if the comprehensive FCe- study will truly inform public policy discussion, as its research team aspires.
“How things are changing; where they might go; what’s driving the changes; what are the different business models that are being considered in various parts of the country,” as Beach puts it.
It was then that the FCe- team hit upon the idea: why not tap into some of UT Austin’s best and brightest for help?
In the course of a few weeks, Beach and Duncan created a course plan for the newest PRP – “New Electric Business Models & the Cost of Electricity” – that calls upon students to quickly develop an understanding of how the electricity utility industry was formed and has evolved over the past century. Students will cover a lot of ground during the course, always with an eye on the end of goal analyzing alternatives to the existing utility business model.
“I’m excited about this,” Beach adds. “(The PRP) represents one element that we didn’t quite get at” in the FCe- scope of work. “I think it’ll be a powerful part of what we’re trying to do.”
Specifically, PRP participants will examine New York State’s Reforming the Energy Vision, California PUC proceedings relating to that state’s push for a dramatic expansion in renewable energy programs, the UK RIIO project, and others.
Students also will explore new utility financial mechanisms such as performance-based ratemaking, market-based earnings, and distribution system provider models, and investigate incentives and subsidies for electricity generation from natural gas, coal, nuclear, wind and solar sources.
Twenty LBJ students signed up for the new PRP, including several from Mexico and other Latin American countries. At the beginning of the course, each student was required to select an area of focus – topics such as barriers facing developers of community solar projects, the controversy surrounding net zero metering, efforts to de-carbonize the electric grid, or an analysis of new generation technologies – and will deliver a presentation to the full class on his or her chosen specialty area. Time permitting, Beach and Duncan will also break the students up into groups of four or five to delve deeper into certain aspects of the course theme.
Typically, each three-hour class begins with a presentation from Duncan, followed by remarks from a guest speaker representing a variety of perspectives and viewpoints. Speakers cover a wide ranges of perspectives – a representative of Texas’ electric grid operator discussing the advent of distributed generation; a transmission planner from an investor-owned utility; an academic discussing latest research findings on residential solar penetration; or a spokesman from a large municipally owned utility detailing new customer service programs.
In one way or another, the speakers are highlighting a movement away from the electric utility industry’s historic business model, a prototype that is clearly undergoing a sea-change.
“The students are hearing from some of the leading thought leaders in the country on this problem,” Duncan says.
For their part, Duncan adds, students will gain a greater understanding of how proposed solutions to the challenges facing the old-guard power companies “that may or may not work in a future where we may see conventional utilities disappear to a large extent, replaced by microgrids, solar and other distributed resources.”
Beach is careful to note that the role of the instructors does not include telling a roomful of grad students how the final report should be structured, let alone what conclusions they may reach. That attitude is in part a reflection of the students’ perspective, he adds.
“We’re letting the students develop their own ideas as much as possible,” he says. “I don’t what to pollute their minds; I want to know what their generation thinks.”
Beach usually delivers the final lecture for the day, which he says frequently offers “a polar opposite perspective” from that of his co-instructor, reflecting their different experiences. The “creative tension” between the two often serves to stimulate a robust debate among students.
In some respects, Beach says, having the students conduct research on issues that will ultimately be folded into a university study, the PRP format is an attractive alternative to hiring an outside consulting firm that may not produce results deserving of their high fees.
“Students bring fresh ideas and a vision of what the future may – or should – look like that old industry hands may not be able to muster,” Beach notes, “Their horizon is much less bounded by what the realm of the possible is.”