BLACK & VEATCH
Executive Summary:
Trend Lines
Black & Veatch’s fifth annual survey marks a significant transition in an evolutionary fashion from prior years. This year Black & Veatch has expanded with a more global presence in its perspectives, focused on the issues that prior surveys indicated were important ones and dived more deeply into the responses. This enabled Black & Veatch to identify and better appreciate the numerous interconnections among the issues covered in the survey.
In this survey, Black & Veatch has seen a greater intensity of general concern about industry issues, as well as significant shifts in respondents’ views. Black & Veatch also has seen the emergence of new issues, a few of which were prompted, no doubt, by the insightful questions asked. Other responses were likely influenced by the earthquake, tsunami and nuclear crisis in Japan, because the survey was conducted shortly thereafter. Still other responses could have been affected by recent world cyber security events, such as the sophisticated, high-profile hacking of one of Iran’s nuclear facilities, the Wikileaks releases and a number of security breaches at commercial data centers. This year’s results paint an interesting and complex mosaic of the often-conflicted state of mind of utilities and other industry leaders.
This Executive Summary provides a high-level perspective on the most compelling issues addressed in the survey and, where appropriate, places this year’s responses in the perspective of prior years’ results. In many cases, the 2011 results were an affirmation of trends identified previously, while in other cases, new and important issues emerged. More in-depth discussion of the issues will be found in the topic-specific sections following this Executive Summary.
The “Top 10” – Is There a Black Swan Here?
In 2006, Black & Veatch undertook an analysis of the issues that would drive change in the U.S. power industry in the coming years. It convened a group of Black & Veatch thought leaders, and also engaged outside professionals, to help identify and better understand how the industry environment was evolving. This resulted in a white paper and list of the “Top 10” issues. As Black & Veatch explored these issues in 2006, the team agreed that it would be valuable to survey industry leaders to obtain the views of the people in the field – executives, managers and staff who had to plan around industry trends and who also had to grapple with the issues head-on, every day. This created the first Strategic Directions in the Electric Utility Industry survey.
As will be discussed in more detail later in this report, “Aging Infrastructure” occupied first place among all respondents this year (when non-utility respondents are included), with “Reliability” in second. Perhaps driven by advances – and failures – in Smart Grid and related IT development, “Technology” has advanced rapidly toward the top of the list, moving from eighth place in 2008 to fourth in 2011.
With recent cyber security publicity, “Security” has moved up only slightly, ranking last in 2006 and 2007, to only ninth place in the 2009/10 and 2011 surveys. Perhaps the industry regards the potential for a successful cyber attack as a “Black Swan” – an event regarded as highly unlikely, but with consequences that would be severe were such an event to occur. The highly improbable trifecta of the huge Oshika earthquake, the resulting tsunami and the impact on the Fukushima power plant is an example of bad things happening that no one expected. Recently, Rhode Island Representative and House Armed Services Committee member Jim Langevin expressed concern over the security of the nation’s infrastructure when he said:
“The utilities don’t have (the incentives that the financial sector has) to secure their systems. The owners and operators of electrical grids don’t get it. Their risk calculation is not the same as what the government has in protecting the public. The regulatory agencies don’t have the authority to require standards or guarantee safety.”
The power industry may disagree, but there is food for thought here.
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Black & Veatch Corporation is a leading global engineering, consulting and construction company with the mission of Building a World of Difference®. By advancing the frontiers of knowledge, we provide our clients with reliable solutions to their most complex challenges, thereby helping improve and sustain the quality of life around the world.
Tags: Aging workforce, Black & Veatch, Electric Utility, Fuel policy, Green, Industry, Long term investment, Market structure, North American Electric Reliability Corporation, Security, survey, Technology
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