The Big Picture: Why Utilities Need Integrated System Planning

Marc Miller (0:13)

Welcome to the ScottMadden Energy Exchange, conversations with leaders shaping the future of the energy industry. I'm your host, Marc Miller, partner and energy practice leader at ScottMadden. In this podcast, we explore the most important issues facing utilities and energy companies, from infrastructure and regulation to operations and strategy. We focus not just on what's changing, but on what it takes to execute in a complex and evolving environment.

Today's episode is titled, The Big Picture, Why Utilities Need Integrated System Planning.

Over the last several episodes, we've talked about explosive load growth, transmission expansion, artificial intelligence, and the investments utilities are making to keep pace with demand. Today, we're stepping back and asking a more fundamental question. How should utilities actually plan for all of this?

Historically, utilities plan generation, transmission, distribution, and in many companies, even gas systems, largely through separate processes. That approach worked when the system evolved more slowly, and the interactions among those domains were more predictable.

Today's energy system is different. Large loads can arrive faster than infrastructure can be built. Distributed energy resources are changing power flows. The generation mix is becoming more variable. Electrification affects both electric and gas networks, and every major investment decision can create implications somewhere else on the system.

That's where integrated system planning comes in. To help us understand why utilities are rethinking planning itself, I'm joined by Stephen Haubrich, a partner at ScottMadden and one of our leading experts on integrated system planning. Stephen, welcome to the show.

Stephen Haubrich (2:06)

Hi, Marc. Thanks for having me.

Marc Miller (2:09)

Stephen, integrated system planning sounds like one of those terms everyone's heard, but few people could define consistently. What exactly do we mean by integrated system planning?

Stephen Haubrich (2:22)

Yeah, I've also found that to be true, Marc. So traditional planning tends to ask separate questions. What's the best generation plan? What's the best transmission plan? What is the distribution system need? Integrated system planning, however, has a different question, and that is, what is the best solution for the system as a whole?

And so, that means improving coordination across planning domains, such as generation, transmission, distribution, and customer resources, and where relevant, natural gas. So, the objective is to make better investment decisions while balancing often competing objectives of reliability, affordability, and clean energy or other policy objectives.

Marc Miller (3:07)

That's helpful, Stephen. You know, utilities have planned their systems successfully for decades.

So, what has changed that makes the traditional model less effective today?

Stephen Haubrich (3:19)

Yeah, it's a good question.

I'd say the issue is not that planners have become less capable, right? Certainly not. The system itself has become more interconnected and less predictable. So, planning practices were built around assumptions, such as relatively steady low growth, centralized generation, and more distinct boundaries among generation, transmission, and distribution. And those assumptions just no longer hold in the same way.

Marc Miller (3:48)

So, the problem is not that anyone planning function is doing poor work. It's that each of those functions can make a rational decision within its own boundaries and still produce an answer that is suboptimal for the enterprise or for the customer.

Stephen Haubrich (4:05)

Yeah, that's exactly right, Marc. You know, the best answer inside one planning silo is not always the best answer for the full system. In fact, it's often not.

Marc Miller (4:17)

So, let's make this concrete. Suppose a hyperscale data center requests several hundred megawatts of service on a compressed timeline, which of course we see all over the industry right now. Why is that no longer just a customer service or distribution plan in question?

Stephen Haubrich (4:37)

Yeah, that's a good example. Well, it's primarily because a single large customer can affect every major planning domain. The utility has to consider whether sufficient generation and capacity exists, whether a transmission can deliver the power, what local upgrades are required, how quickly the load will ramp, and what risks arise if the customer does not materialize as forecast.

So, the customer may also be able to phase demand.

They could provide on-site generation or storage. They could procure a capacity. Or they could accept conditional service during constrained hours. Those options can change the generation, transmission, and local infrastructure solution. So, large load growth has effectively turned the customer connection decision into a system planning decision.

Marc Miller (5:31)

Yeah, it sounds like it's introduced a lot of complexity in that process. How does integrated planning help utilities to balance the two-sided risk here? So, overbuilding and creating stranded cost exposure versus underbuilding and losing reliability or those economic development opportunities?

Stephen Haubrich (5:55)

Well, integrated planning creates a structured way to evaluate multiple plausible futures and compare alternatives across the full system.