A year of extreme weather and its warning to the power industry

Josh: One of our largest customers in the Southeast had the worst hurricane season in its history this year. They spent $500 million resolving storms. They had to rebuild the same infrastructure multiple times in one summer. These are really big impacts for them. So if they have to redesign it and strengthen it, how do they do so?

Brandon: Welcome to the Leidos MindSET podcast. I'm your host, Brandon Buckner.

Meghan: And I'm your host, Meghan Good.

Brandon: Even if you only consider the weather, 2020 was still an extraordinary year. We saw record heat, wildfires, tropical storms, and most recently, winter storms. What has the power industry learned over the past year about the power supply and its vulnerability under extreme conditions?

Meghan: To learn more, we welcome Josh Wepman, a commercial energy expert at Leidos, to share his thoughts on what the power industry can learn from the extreme weather events of the past year. We pick his brain about resilience of grid infrastructure, changes needed to reduce carbon emissions, and what's next to unlock the potential of distributed energy. Brandon, let's get started.

Brandon: So Josh, 2020 was obviously an extraordinary year for many reasons, but it was still a remarkable year, even if you only consider Mother Nature. It was one of the three warmest years on record. There were 30 tropical storms in the Atlantic, significant enough to be given names, which is also a record. Death Valley in California recorded the hottest temperature on the planet in the last 80 years. There were enormous wildfires in the Western U.S. and Australia. And more recently, we saw record low temperatures and snowfall in Texas and across the Plains. Do you believe extreme weather years like these are the new normal?

Josh: Well, I would say the simple answer is yes, but some of the detail behind it is, you know, there's a saying in the forecasting world, all forecasts are wrong, but some forecasts are valuable. We're not fortune tellers, but there's a good way to look at history and forecast the future, and climate science predicts more extremes in weather, hotter hots, colder colds, in the seasons. And that does appear to have some evidence in recent history, as you outlined.

Josh: Wildfires, hurricanes, tornadoes. If you look at the historical record, an asymmetric percentage of those serious events have happened recently. You think about flooding in Houston over the last couple hundred years, or hurricanes. The number of 100-year events that have happened in the last 30 years is material. And it's hard to ignore those things. So will it continue? Is that the new normal? The forecasts say it's more likely than less likely, and I think our experience is bearing that out. Our investments in recovering from things are bearing that out.

Josh: So that means there's real social and political and personal risk that we should be addressing. Maybe thought of simply, risk is a combination of probability and impact. And if you have high impact events that are increasingly probable, then our mitigation and our response and our planning for those should respond accordingly. So I would say yeah, it really does feel like the new normal when you look at the data.

Brandon: So speaking of high impact events, as we saw in the headlines last month from Texas, extreme weather events can cause millions of homes and businesses to lose power, and obviously this can put people in a very dangerous situation. Explain to us just how vulnerable our power supply is in the face of more and more extreme weather events. Should we expect more emergencies like we saw in Texas?

Josh: Well, again, I think the answer is likely yes. It's impossible to be a perfect fortune teller, but our power infrastructure has always been vulnerable to severe weather. We don't build things that can withstand category five hurricanes or huge earthquakes or things like that. The economics just don't support it. There's 5.7 million lines of power grid in the United States. And we can harden some of it. We can underground some of it. It's very expensive, but we're making good progress in the industry. But by and large, a huge amount of that is on poles and wires and towers above ground, where inclement weather happens.

Josh: The other thing to think about in our power grid is that it's basically a large linear system. There's a whole bunch of single points of failure between where power is generated and where you consume it. And you can't really protect all of them everywhere. It's a weakest point in the chain problem. So as we think about more severe variations in weather, colder colds, hotter hots, more storms, more 100-year events, I think it's hard to imagine that it won't have a negative impact on resiliency of power, availability of power. Our grid in general, the way we built it the last hundred years, just doesn't contemplate a regular recurrence of high impact events. And we hadn't planned for it that way. And unless we change, we're going to see more issues. I think that's easy to predict.

Brandon: So tell me more about that change. So you said we're making progress, right? And that while we can't fully protect our power grid, we can harden it. Tell me, how can we harden our infrastructure to make it more resilient to these extreme weather events we know are going to happen?

Josh: That's a great question. So we do things, like in Florida, we're redesigning major grid infrastructure to be storm hardened. Wooden poles are becoming steel and concrete. We're changing the way we tension lines so they can't blow around in the wind and create phase and ground faults. We can actually harden the above ground infrastructure, and it's expensive, but if we keep having to rebuild it storm after storm after storm, there are certain places that makes a lot of sense.

Josh: Equally, undergrounding our grid is an effective way of protecting it from a lot of these negative effects, but putting electrical infrastructure underground is a very expensive proposition. And so making the linear infrastructure, those 5.7 million miles, in certain places more resilient to increasingly inclement weather is one big thing we're doing. But looking forward, we have a historical model of building large power plants in the middle of nowhere and then building large linear systems to deliver that power to homes and businesses. And we just can't protect 5.7 million lines of infrastructure from severe weather that's happening more often.

Josh: So we're going to have to start looking at how do we put power generation, how do we put power supply closer to the people and the services and the businesses who consume it, which we think of as resiliency, which we think of as distributed generation. We're going to have to start thinking about ways of not having to protect every part of the grid, but making it work with what stays up during a storm.

Meghan: So all of that, Josh, it really, in my mind, definitely coming from more of an IT and cyber environment kind of background, I mean, it sounds really similar to the challenges that we're facing there, where there's so many things that used to be to a data center that are now to the cloud, and so many things that used to be centralized in one place, and now we're seeing a lot more distributed computing.

Meghan: As you're talking about this, this model of these linear lines, and then what's coming from, you know, it's almost the wheel and spoke sort of model of the distribution, have you started to look from other perspectives and trying to adapt other ways to really add resilience, similar to how we're trying to push computing to the edge, to where it's needed, just like to where power is needed? Have you tried to look at those different models and see if that influences your plans for resilience?

Josh: Yeah. I think the parallels are really strong in that regard. If you think of a data center as the central asset that we can't always guarantee connectivity to, a power station isn't so different. And in both models, we're looking to distribute the resources out to the edge to make it more available to more people in more situations. And there's a lot of similarities in the IT and in the technology, in the cybersecurity. I mean, power...

Josh: ... in the IT, and in the technology, in the cyber security. I mean, power generation is a little different than a computer. But when we had to instrument and protect a power plant, one, it was largely in the middle of nowhere. Two, it was mostly air gaped. And three, you could easily control who had physical access to it. When we start distributing those things out to the edge, it's much closer to large population centers. It's much more easily physically accessed, in terms of people being able to walk right up to those kinds of assets and our cyber security, our physical security, our digital controls all have to reflect a very different concept of operations. And those aren't things that we've invested in our industry over the years. These are our new challenge and we're drawing from other people's experience of how do you secure? How do you harden? How do you make resilient and reliable resources at the edge, so they perform like resources at the core?

Meghan: Oh, yeah. And protect them from weather events that you can't really forecast and that are increasingly extreme. Right?

Josh: Yep. And so, we have to physically protect it from people who would choose to do harm and have more access. We have to keep it running in very hot and very cold conditions. We have to be able to connect it and disconnect from the grid, a condition we call island-ing. You know, it needs to work with the grid when the grid is up and it needs to support resiliency and operations of things like community centers or critical resources or hospitals. When the grid is down, it becomes a very dynamic environment that requires a lot more control and requires a lot more measurement and visibility. And that's a strain for all IT systems, right? Confidentiality, integrity, availability. All of those things are challenges we now have to deal with, not just in small power plants and power plants, but now distributed across the entire grid.

Meghan: Well, Josh, it sounds like the challenge is only compounding with newer kinds of sensors, new locations where you're generating power, and different management and security solutions that seem like they'll change over time. How do we manage all of that complexity as the grid evolves?

Josh: Meghan, I think that's a great question. So the dynamics of all of us are getting more complicated and that's a real challenge for something that's supposed to be stable and reliable and cost effective, right? Instead of just using a gas turbines or diesel generators, like we used to and distributed power and backup, now we've got solar and battery and wind and variable inputs and variable voltage. We've got inverters that we can control. It's a much more dynamic system. So you think about the consequences of all the things we need to control and monitor and manage. You think about the consequences of remote monitoring and what happens when it goes away. There's a whole lot we can do to build a more resilient energy infrastructure, but it's complicating an already complicated system. And that doesn't come without its own risk and its own challenges.

Josh: And those are the kinds of things that we here at Leidos are really trying to take head-on. How do we make this kind of approach more cost effective? How do we make it easier to design and deploy? How do we make it more secure in its operations? So when we respond to the weather threat and the climate threat, we're not just substituting a physical threat or a cyber threat, right? And we need to make it on net better, not just create new derivative problems. And that takes a lot of planning and a lot of creative thinking and a lot of industry partnerships, but those are some of the areas where we really think a firm like Leidos can help accelerate this change safely, reliably, and cost effectively. And not just create new challenges.

Brandon: Josh, I'm curious, as we're moving from this more centralized model to a more distributed model. You did mention a few different distributed energy sources. What are some of the more promising ones right now? Where are most of the advances happening? And where do you see more opportunity to develop these different sources of energy?

Josh: There's never been a greater number of new options for the energy industry. It's a time of great innovation, right? Over the last number of decades, solar has evolved and capability improved in efficiency and come down in price. Batteries are starting to follow that cost curve. And that's really disrupting how we generate and deliver and manage power. Wind has followed a similar cost curve and capability. One of the amazing things, when you start thinking about new options, is there's always more new, interesting options. I mean, the micro nuclear industry, that's trying to take nuclear power plants and turn them into refrigerator size things that can be reliable carbon-free power at the edge of the network. There's floating solar. There is fuel cells and hydrogen, and thinking about ways of turning gas turbines into hydrogen turbines and using the gas distribution system as a way to start increasing the amount of carbon free fuel that these resources use.

Josh: When we do planning for the grid, when we look at growth and reliability and think about the load of EVs and all the ways that the grid is going to have to change, traditionally, we would just build new feeders and we would build new distribution and transmission infrastructure and build new, big power plants. Now, we've got a wild set of options to choose from. And one of the harder questions to answer is which of those options would you choose and why? It turns out it's pretty hard to figure that out. So we've worked on planning tools to help utilities evaluate every plausible option from wind to solar to gas turbines to batteries to micro nuclear to the demand response to energy efficiency, and figuring out what is the best technical and economic way to solve these problems? And how do you best orchestrate and organize what are a wide range of options into the most prudent and rational choice for the utility, for the consumer, and for reliability, efficiency, and safety?

Josh: It really is a wonderful time in energy innovation, but it creates an awful lot of questions to be answered that we haven't had to answer before. It's actually one of the more fun parts about dealing with all this is there's all kinds of new challenges to deal with. When you think about, we're not going to build what we used to build, we're going to build new things. What should we build? What should we choose? And how do we communicate to all the different stakeholders that doing something different is prudent and reasonable? That's one of the big challenges to unlocking the potential of distributed energy and resiliency through micro grids and DERs and non wire alternatives.

Brandon: Interesting. I'm glad you mentioned micro grids, because we hear a lot about the grid, right? And then we hear about micro grids. Remind us what are micro grids and where do they fit in?

Josh: That's a great question. So the grid, when you think about the big grid of America or the grids of America, there's generation of energy. There is the delivery over wires, and there is a load or a customer. And when we think about a micro grid, we're just taking all of the big space and shrinking it down. We have generation consumption or demand, and the connectivity in a small physical space thing. Think a hospital campus, or a university, or a big commercial or industrial plant. Think about an auto manufacturer where when resiliency and reliability and carbon production as well are all important to their business or their home or their locality, a micro grid as a way to become self-sufficient, to be able to generate and use energy in the way that makes the most sense for you.

Josh: Micro grids are being deployed on university campuses to keep them online when the grid becomes unstable. Big auto manufacturers are deploying micro grid, so that production isn't interrupted when there's some sort of a grid reliability event. Community centers are investing in micro grid. So when there's a big regional event, there's a place for people to go that has heat and power and light, and a place to go for safety when safety isn't available.

Josh: ... to go for safety when safety isn't available writ large. Microgrids are just a way of taking reliable power and reliable control of power and shrinking it down to your home, your business, your community, your local area of interest. It can be complicated and it can be dangerous if done wrong. But if done right, it can be cost-effective and it can really solve the problems of reliability without creating new problems of cost efficiency, reliability, or safety.

Brandon: Interesting. What I want to do is shift back to the topic of decarbonization, which we touched on earlier, but didn't really get into. So many have argued that these extreme weather events are the effect of climate change. Whether or not someone wants to argue with this, there seems to be so much momentum all over, toward big changes in the industry that will cause us to do things differently. For example, many of the largest companies in the US have pledged to become carbon neutral. More and more local governments are adopting policies that curb emissions. In a recent survey, nearly half of young adults in the US chose climate change as their most pressing global concern.

Brandon: I think it's fair to say more change is coming, especially, in transportation and electricity. In fact, the Biden administration has set targets to decarbonize transportation by 2035 and to decarbonize energy by 2050. Remind us what it means to decarbonize and why we should take this so seriously?

Josh: Why is it so important to decarbonize? Because there's a growing risk of the consequence of climate change for all of us. It's a societal problem, and it's not always true that businesses or individuals can effectively solve societal problems on their own, it's the thing we have to do collectively. That's why you see communities and businesses and large organizations stating their intention to get to carbon neutrality. What does it mean to do that? It means taking fossil fuels and other things out of our energy mix. As you've outlined, electric generation in the United States is 27% of the problem. Transportation and using gasoline and diesel for surface transportation and airborne transportation is 28% of the problem.

Josh: That's over 50% of our carbon output. There are meaningful alternatives that we can be applying to reduce the carbon output without having to give up the modern things that we've all come to depend on. Take transportation, for example, we can build effective electric vehicles and there are investments we can make as a shared group to make sure that we have refueling stations or recharging stations that are as ubiquitous and easy to use as internal combustion gasoline fueling stations. We can make sure that we have a wide enough range of vehicles to serve everyone's transportation needs. You've heard GM and Audi and Ford and a number of auto manufacturers commit to scaling up their electric vehicle supply and to actually end research and end the production of internal combustion engines.

Josh: They recognize where the market is going to need to go because of the carbon commitments we need to support. In power generation, solar and wind are in many cases now cheaper than building a gas or coal plants. They're cheaper to operate, and when we bid power in the markets, it's becoming uneconomical to run certain kinds of traditional fossil fuels. That's not because of policy, that's because of market dynamics. What it means to do this is to take some fairly achievable steps in shifting to clean fuel sources for transportation and clean fuel sources for electric power generation. As we make those changes over time, we take huge chunks of our carbon footprint out of the way we live our daily lives. Hopefully, without noticing too much difference in the way we choose to live our daily lives.

Brandon: Interesting, so you mentioned our daily lives, how might someone listening to this podcast help to curb emissions in their everyday lives?

Josh: That's a great question. I think really big things take a group effort to go do, and there's the old saying, "Think globally, act locally." There's some pretty simple things individuals can do if they just want to be more proactive. Most utilities offer a renewable energy portfolio. You can sign up to have more of your energy mix up to all of your energy mix provided by solar, wind, hydro, and other renewables. Sometimes it costs a little bit more, but people are putting their money where their mouth is and says, "This is important and I'm going to be part of the solution." As we scale those things up, the costs come down for everybody.

Josh: For those willing to be early adopters of renewable energy, you don't have to put solar power on your roof. You can just choose that resource mix from your utility. When you think about transportation, one easy thing is getting an electric vehicle, but if you're a one-car family, like my family is, having one... There aren't very many one-car families that choose an EV. It's just not wildly practical just yet, but it's getting there. If you're a two-car family having one car that's an EV is a very popular thing to do. But range is increasing, lots of opportunities for personal transportation are increasingly electrified. But you don't always have to move yourself, there's public transportation that's either hydrogen based or electric based.

Josh: That's a great way to curb your personal carbon production or just driving less. There's lots of little things that people can do without changing the way they choose to behave or want to live their lives. It can be carbon reduction positive without being overly burdensome. If there's one other thing you could do, plant a tree. It's nice in your yard and it really does a great job of sucking the carbon in the atmosphere that's already there.

Brandon: Even if we were to act collectively and everyone were to do their part, these targets by the Biden administration still seem very ambitious. How attainable do you believe they are? How big is the challenge?

Josh: I think it's a substantial challenge on a couple of fronts. One, this isn't the way we've always done things, and it's hard to do new things. Adopting change is hard and adopting change large scale is hard. That said, I think we have more of a shared purpose and a shared mission to take things like that on than we ever really have before. Will we need to incentivize certain kinds of behavior? Yeah, probably. We have for years and years and years, we've had energy efficiency incentives. Go replace your windows and you'll get a tax credit or a rebate for going and doing that kind of behavior. Will we do that to sign up for clean power or to incentivize electric vehicles or things like that? Yeah, we might put some stimulating investment in to drive the way people make economic choices.

Josh: It's worked for a lot of things in the past and it could work looking forward. But it's a time for bold action. If we agree as a community, if we agree as a group of people, as a nation, that we want to manage these risks, it's time to recognize a shared problem statement and animate ourselves in support of it. It will be hard. It will bring new challenges and it'll take a bit of diligence, but I do think it's doable. I think the hardest thing is finding the shared will. If we're all in it, it's technically doable. It's process doable. It's people doable. We know how to solve the problem, it's just whether we choose to have the will to.

Meghan: Now all of that excitement, I mean that's the innovator's challenge and the innovator's dilemma. That means that there's this great opportunity out there over the next couple of years to really make a big impact. What are you excited about in that space technically? What are the things that you're seeing now that you think can really make a big impact?

Josh: There is a low-hanging fruit there, and there are greater things that we can tackle. We're already doing some big important things to deal with this. We're trying to decrease the costs and improve the safety and reliability of distributed energy resources. That'll make the economic signals of people. Everybody wants green...

Josh: Economic signals of people. Everybody wants green, resilient and low cost, but those are hard things to deliver all at once. We're doing the work to try and make distributed green technology more reliable, lower cost, easier for people to choose. We're already doing grid heartening to protect the most important parts of the above ground infrastructure by redesigning it and under grounding it and making it more resilient to energy threats. We're already finding that solar and wind and certain renewables are more cost-effective than their traditional carbon competitors. We're scaling those up, right? We're making little steps that are making the next steps easier.

Josh: I think everybody's been through this experience when you try and do a giant big thing all in one bite. It seems too daunting. When you find incremental steps to move yourself in that direction and incentivize people to move in that direction and sort of just keep taking one step in front of the other, the big daunting challenge gets smaller and smaller until it's reasonable to take it on. I think we as an industry, we as a company, we as a group of innovators and people who just want to go solve the nation's hardest problems, that's what we keep doing. We keep trying to find the next incremental piece that allows us to build momentum towards that really big challenge of offsetting carbon and reducing the impacts of climate change to all of us.

Brandon: Josh, as an energy expert at Leidos, I'm curious, who are your customers? Who are the big players in this story at the intersection of extreme weather and the resiliency of the grid? And what's the big takeaway for them?

Josh: Yeah, I think there's two really big groups of stakeholders that we engage with. One is the large utilities. They're the people who run the big transmission distribution grids, and they feel this problem acutely, right? Their infrastructure is aging. They have increasing storms they have to deal with. Things keep getting knocked down from inclement weather. One of our largest customers in the southeast had the worst hurricane season in its history this year. They spent $500 million resolving storms. They had to rebuild the same infrastructure multiple times in one summer, right? These are really big impacts for them, so if they have to redesign it and strengthen it, how do they do so? If they keep having to do it over and over, what new strategies do they need to apply so that they can deliver resiliency and safety and cost-effectiveness to their customers, right? I mean, these are at the heart of their mission and their operations to do. We're dealing with them every day, trying to find new ways to measure, new ways to monitor, new ways to design and new ways to build that take the opportunity created by all this challenge and respond better, right. Learn how to do it better over time.

Josh: The second big constituency is the big commercial and industrial organizations think auto manufacturers or big box retailers, right? They're trying to apply social responsibility and find ways to be green and proactive. They're trying to improve the economics of their operations by being more resilient and be able to ride through energy resilience challenges, and that's driving them to want to create these kinds of micro grids, right? How do they take ownership of their own energy destiny? How do they use smartly, produce smartly? And ultimately, how do they drive their own bottom line by selling power back to the grid when it's in everyone's best interest to do so? We're helping them think through not only how do they optimize their processes to reduce their energy footprint, but also creating more of an understanding of how to implement their own energy systems, manage their own energy systems and take ownership of their own destiny, right? That relationship between the grid operators and the large and small customers is really changing, right. Everybody used to just be a consumer of energy. Now, virtually anybody can be both a consumer and a producer, and that's really changing the dynamics of how we all work together.

Josh: Is that a lot of change to take on? Yeah. Is it going to change the way we operate and manage and do all these things? Yeah, but what a great opportunity to make more of a shared system that benefits everybody in the right kinds of ways with the right kinds of incentives and the right kinds of signals.

Brandon: Any other final thoughts for our listeners? Any big questions that we should have asked?

Josh: I think one thing that I reflect on a lot is sometimes you think about these kinds of challenges and you think about the people who are supposed to deal with them, right? Who's in charge of this stuff? Who's going to go do all this stuff? What are they going to do about it? I think as with all big challenges, it's a we question. What are we going to go do about it? What am I going to go do about it? And while I can't solve the carbon challenge on my own, while I can't solve the economics and reliability challenges of the grid on my own, there are things I can do. There are actions I can take, and there are things I can do to help our collective challenge, right? So I get up every morning thinking what can I do to help push this forward? And if everyone did that, I think this challenge would get a lot less daunting and a lot easier for us all to take on and achieve.

Meghan: Now Josh, can I ask, how did you get involved in this? What led to where you are today and kind of the incremental changes and the excitement that you've built over the years, how'd you get here?

Josh: How did I get here?

Meghan: It's not an existential question.

Josh: What I love is a hard question, right? When we ask the right question, we organize ourselves in a way that can really help solve problems. When we're overly focused on one particular answer, sometimes we miss the bigger opportunity. And one thing I love about working in Leidos is that I'm surrounded by people who are passionate about trying to figure out what is the right question to ask? What would truly make a difference to our biggest, hardest problems and what can we do to be relevant to solving that? And that's been true as I've worked through critical infrastructure. It's been true as I've worked through oil and gas. It's been true as I've worked through autonomous drones, right? Everything we go do has the backdrop of how do we take real friction and turn it into forward momentum? And honestly, that just gets me out of bed every morning. It's the thing that I'm passionate about doing every single day.

Meghan: Thanks for your time today, Josh.

Josh: Oh, it was my pleasure. I love talking about this stuff. I hope it's useful to people.

Meghan: And thanks to our audience for listening to this episode of MindSET. If you enjoyed this episode, please share with your colleagues and visit leidos.com/mindset.