Keynote Speech- Jim O’Neil - Texas A&M...

Copyright © 2014 Quanta Services Inc. Confidential & Proprietary 1 .

Jim O’Neil CEO & President

October 2014

Grid of the Future Symposium

CIGRE U.S. National Committee & EPRI


Who is Quanta Services?

Largest Electric T&D

and Gas Pipeline Specialty

Contractor in North America

More than 40 Companies &

25,000 Employees

Providing Full Range of Services


The Grid of the Future Depends on Striving for ZERO Harm Every Day

Safety: Our Highest Priority

Quanta Services is Founding Member,

OSHA National Safety Partnership


2011 2012 2013 2014 Est.

($ in millions) Revenue

$4,194

$5,920 $6,523

(1) Represents the midpoint of guidance range

* * $7,700(1)

Our Financials: Strong Indicator of Grid Modernization & Growth

Electric Power 69%

Oil & Gas Infrastructure

29%

Fiber Optic Licensing &

Other 2%

2013 Consolidated Revenue = $6.5 Billion


Large investment required for: Aging Infrastructure Reliability, Hardening,

Resiliency, Security U.S. Electricity Fuel

Transformation Smart Grid Demand Side Innovations

21st Century Grid Requires "Smart”

Solutions

Grid Transformation Driver: Electricity Vital to U.S. Economy

U.S. Outage Cost = $125 Billion/Year (DOE)

U.S. Outage Events Increasing

http://www.independent.co.uk/environment/climate-change/the-little-island-and-its-big-green-victory-1827638.html?action=Popup�


With limited resources for wholesale asset replacement in the near term, holistic strategies are required to manage cost and reliability to acceptable 21st century performance levels.

Grid Transformation Driver: Holistic Approach Required

System Reliability & Capability

Business Goals

Capital/O&M Budgets

Aging Infrastructure

Grid Hardening

Asset Management: Predictability of Cost

& Reliability

The Grid is 40 to 60 years old on average, with 25% of the Grid a

performance concern.


Grid Transformation Driver: Game Changing Events

Super Storm Sandy

Grid Vulnerabilities Revealed White House, Congress, FERC, NERC focused

Metcalf Substation Gunshot Damage


Grid Transformation Driver: U.S. Fuel Transformation

Natural Gas

Renewables

Nuclear

Coal Petroleum liquids and other

1990 2000 2010 2020 2030 2040

2012 History Projections

6

5

4

3

2

1

0

GAS Exceeds COAL in 2035; 50+ GW COAL Retired More COAL Retirements Probable; NUCLEAR Stressed

Source: EIA.GOV

Trillion kWhs


Grid Transformation Driver: Shale Gas Impacts Energy Prices

1990 2000 2010 2020 2030 2040

2012 History Projections 12

10

8

6

4

2

0

Market Prices Stress Coal and Nuclear Economics Lower Prices Create Headroom For Grid Modernization

Henry Hub Spot

Natural Gas Prices

2012

$/MBtu

Source: EIA.GOV


Grid Transformation Driver: Renewable Surge

Geothermal

Biomass

MSW/LFG

Wind

Solar

Conventional hydropower

2000 2010 2020 2030 2040


500

400

300

200

100

0

Non-Hydro Renewable Sources Grow 3.2% Annually Game Changer – Solar Grows 7.5% Annually

Source: EIA.GOV

Billion kWhs

Includes

Distributed Resources


Grid Transformation Driver: Competitive Transmission

FERC Order 1000 in 2011 and clarified in 2012 enabled competitive transmission:

• Ensures regional and transparent planning • Reinforces "beneficiary pays" cost allocation • Eliminates rights of first refusal (ROFR) or monopoly

status for building transmission unless states mandate ROFR − Affects higher voltage, regionally allocated transmission

FERC Order 1000 will lead to increased transmission development and developers


Grid Transformation Driver: Smart Grid & Distributed Resources

Smart Grid investments • Transmission made smarter

with enhanced monitoring, protection, and control with synchrophasors

• Distribution being transformed with automation and feeder optimization

• Demand response with smart meters • Utility grade battery storage introduced

Microgrids and "behind the meter" distributed energy resources require a robust, hybrid T&D grid • Grid connection required for reliability and market reach

Source: NASPI


Grid Transformation Headwind: Stagnant (Net) Demand

Trendline

3-year moving average

1950 1970 1990 2010 2030


10

8

6

4

2

0

-2 1960 1980 2000 2020 2040

2012 to 2040 > Typical Home Down 4% (to 11.6 MWh/yr) 2012 to 2040 > Lighting Down 65%

% Growth

Source: EIA.GOV


Grid Transformation Headwind: Rate Fatigue Average Residential Customer Monthly

Bill Today Approx. $110 (Source: EPRI)

• Energy = $70; Distribution = $30, Transmission = $10

Utility Model based on kWh sales, but with stagnant sales, rates will go up to pay for needed grid investments • Result = Rate Fatigue unless VALUE

demonstrated • BUT, energy prices have dropped creating some

relief


Perfect Storm: Aging Workforce + Aging Assets = Reliability Decline Requirement: Programs to attract, train and develop engineers, linemen,

station electricians, P&C resources, and other technical resources

5

16

232222

9

2

19

31

2321

4

0

5

10

15

20

25

30

35

The U.S. utility workforce is getting old … % of workers by age group, 2011

…limiting the labor pool for utilities

▪ Utility workforce not adequately replenished

▪ Recession has hurt development effort

▪ Long training lead times ▪ Limited utility labor supply

~50% of workers will be eligible for retirement in the next 5-10 years

20-24 25-34

35-44 45-54 55-64 65+ U.S. average Electric power generation and T&D

Grid Transformation Headwind: Aging Workforce


Grid of the Future requires fewer interruptions and more modernization

Circuits most in need of relief are those difficult to schedule out of service

Requirement: Enable rebuilding, reconductoring, maintaining at any voltage without interrupting service

Enabling Technology: LineMaster™ robotic arm

Innovations Required: Energized Services Example


Demand For Electricity Will Increase Population growth, electric vehicles, use of renewable

energy, etc.

U.S. Fuel Transformation Will Occur Dash to gas, renewable surge, plant retirements

G, T & D Investment Will Increase Infrastructure Investment - Electric utility industry will

require up to $2 trillion by 2030, including generation (EEI) Grid Will Be Made Smarter, Reliable, Resilient, Secure

Advancements in technology and skilled workforce Customers Will See Value Beyond Commodity

Increased choices, digital age reliability, comfort value

Societal and U.S. Economic Goals Met Sustainability and support of growing U.S. economy

Grid of the Future: Roadmap


The 21st Century Customer must see Electricity beyond a Commodity and be informed on the Societal and Personal Comfort Benefits that Electricity provides…

We need to create the Electricity Value Proposition with Digital Age Reliability built with Grid Investment, Technology and "Smart Services" for Customer Choices and Comfort…

The Next Generation, some among us here today, will develop the Breakthrough Strategies and Technologies needed for the Grid of their Future.

U.S. Grid of the Future

Keynote Speech- Jim O’Neil - Texas A&M...

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