How West Coast heat waves are straining electrical power grids

Heat waves on the west coast put a strain on the power grids. Surya Panditi, CEO and President of Enel X North America, attends Yahoo Finance Live to discuss.
Video transcript
AKIKO FUJITA: Well, some relief is in sight in the west after scorching temperatures broke records everywhere from Utah to Arizona. And while states like California have ducked from rolling power outages this time around, given the high temperatures at the start of the season, there are many concerns about the resilience of the power grid. To discuss that, let's bring in Surya Panditi, CEO and President of Enel X North America.
Surya, you have a lot of visibility on this front. And I wonder how far your phone has been ringing here in the past week as more and more people are saying, well, wait a minute. It's only June, and we're already dealing with the kind of power surge we're likely to see later in the hottest months of summer.
SURYA PANDITI: Well, Akiko, first of all, thank you very much for the invitation. And just to tell a little bit about the holding company Enel, with over 65,000 employees, is one of the largest energy companies in the world. And we're the biggest - probably one of the biggest renewable energy companies in the world. Enel X works primarily with commercial industrial customers to help them consume, store and use energy more intelligently. And one of the things, as you yourself point out, of course, is that we've seen record temperatures in the west. We saw weather events in Texas.
And so, with our demand response program, we're again working with commercial and industrial customers to help them - to support the network by reducing energy consumption at such events. And I'm happy that we were successful. Last year in California we were probably delivering between 150 and 200 megawatts a day. And so did we - we scored 100% - and over 100% in Texas during the weather events we saw there.
AKIKO FUJITA: Where do you currently see the most important weak points? And obviously your program is getting more and more popular - more and more of your clients are trying to add reinforcements in anticipation of the hotter summer months. How well is the energy network currently equipped to cope with such a level?
SURYA PANDITI: No, we certainly - on the one hand, we saw these programs, like the ones I was talking about, to curb the demand side, i.e. the demand for energy during these hot grid events. I see two areas that I think should be improved. The first is that both California and Texas have set some caps on how much demand-side resources can participate. And I think they're too low. And we want those caps to be increased or removed so that we can participate better.
And that's - if you think about it, the beauty of Demand Response is that you don't have to generate that energy because it isn't being used. So you reduce the demand. And secondly, we would like better price signals and market participation from decentralized energy resources, such as battery storage systems that can be installed at the customer's premises.
And in order for these to be financially attractive for a company like ours - and just to point out, Enel X is ready and able to invest millions, tens of millions, hundreds of millions of dollars in these systems. But of course we are looking for financial returns for this. Hence, I would like to see better market constructs that exist in some regions, but we would love to see them in places that experience these weather-related events.
ZACK GUZMAN: Yeah, and Surya, I mean, it sounds like this is an important contribution as we are in this shift around the infrastructure debate and why, you know, renewable energies could need a boost if they did maybe federal support will come. When we talk about some of the topics related to energy storage it sounds like a lot of people are talking about storing electricity from renewable sources, which is perhaps one of the hiccups in the system as we have it today. I mean, is that maybe the biggest problem when it comes to storing some of these renewable sources?
SURYA PANDITI: I see two things happening. By the way, just to point out that the federal government, especially for the Federal Energy Regulatory Commission, has supported decentralized energy resources. In fact, they made some decisions about this over the past year. But the United States and - well, the United States tend to be very fragmented when it comes to system operators and utilities across the country, with very different rules and regulations depending on where you operate.
So the combination of different types of renewable energies - so you have wind and sun at different times. That's a very good combination because they tend to be at different times - to peak. And then you add battery storage. And now you have a perfectly available energy system.
And the nice thing about distributed battery storage in connection with a type of renewable energy is that you do not have to increase the transmission capacity as much because you are already where the energy is consumed. So we see very good investments, both financially and in terms of resilience, provided the market--
AKIKO FUJITA: Yes--
SURYA PANDITI: - is there.
AKIKO FUJITA: And Surya, I've been with-- I've heard you talk about finances a couple of times. When you talk about the battery storage system, how much is the price likely to go down as more adjustments or acquisitions happen?
SURYA PANDITI: So let's talk about the various forms of revenue that can be achieved with a battery storage system. One is to be able to lower the peak charges when - there are peak demand charges for the customer. So think of a battery storage system that can be charged at low energy prices and discharged at high energy prices so that they do not consume from the grid.
Second are different markets. We talked about demand response. It is a so-called capacity market where you can register your systems and get paid for being able to provide this energy. And then of course we can also in some markets, for example in New York City, a program called Con Ed called a non-wire solution, in which we sit and are able to supply energy to the grid when needed. So there are different ways of providing this income. And as I said, you know, we are in a position to be happy to invest as long as we get a reasonable return on those investments.
AKIKO FUJITA: Surya Panditi, CEO and President of Enel X North America, nice to speak to you today. Cherish the time.

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