The Electric Butterfly Effect

The butterfly effect is a term used in chaos theory to describe how small changes in initial conditions can lead to vastly different outcomes. The term was coined by a mathematician and meteorologist after he discovered that even tiny changes in the initial conditions of a weather model could lead to vastly different outcomes. We are in the process of seeing a butterfly effect as cities and states across the US are considering or implementing bans on natural gas appliances in new buildings. Electric utilities are facing a challenge namely, how to prepare their distribution systems for the increased demand and load from electrification. Natural gas appliances, such as water heaters, furnaces, stoves, and dryers, account for a significant portion of residential and commercial energy use, and switching to electric alternatives will increase the demand for electricity. According to a study by the American Gas Association^[1], replacing all natural gas appliances with electric ones in California would require an additional 120 terawatt-hours of electricity per year, which is equivalent to 50% of the state’s current electricity consumption. One of the main drivers for banning natural gas appliances is the desire to reduce greenhouse gas emissions from the building sector, which accounts for about 40% of the total US emissions. By switching to electric appliances, such as heat pumps, water heaters, stoves, and dryers, buildings can reduce their direct emissions from combustion and take advantage of the increasing share of renewable energy sources in the electric grid.

However, this also means that utilities will have to deal with higher peak demand. According to a recent study by the Rocky Mountain Institute^[2], electrifying all US buildings could increase peak demand by 19% by 2050. To cope with this challenge, utilities will have to invest in upgrading and expanding their distribution systems, which are the wires and equipment that deliver electricity from substations to customers. In every neighborhood, the distribution system is designed to handle a certain amount of load and peak demand that varies depending on the time of day, season, and weather. However, when customers switch from natural gas to electric appliances, they increase their electricity consumption and peak demand. This can cause overloading, voltage fluctuations, and power outages.

At the same time, utilities will also have to consider the impacts of Distributed Energy Resources (DERs)^[3], such as rooftop solar panels, battery storage, electric vehicles, and smart thermostats, that can either add or reduce the load on the distribution system depending on their operation and control. DERs can provide benefits such as reducing peak demand, increasing resilience, and enabling customer choice, but they also pose challenges such as increasing variability, complexity, and uncertainty in the system. To optimize the integration of DERs and electrification, utilities will need to adopt a more proactive and holistic approach to planning and operating their distribution systems. This may involve using advanced data analytics, modeling, and simulation tools to forecast load patterns, identify potential constraints and vulnerabilities, and evaluate different scenarios and options for system upgrades and enhancements. Utilities will also need to leverage smart grid technologies that can enable real-time monitoring, control, and coordination of grid assets and customer devices. These technologies can help utilities improve operational efficiency, reliability, and flexibility, in addition to providing new services and value streams for customers and grid operators.

The debate over natural gas appliances is likely to continue as more jurisdictions adopt policies to phase them out. Electric utilities will have to prepare for the potential impacts of electrification on their distribution systems, such as upgrading transformers, wires, and substations, investing in energy storage and demand response programs, and ensuring reliability and resilience. They will also have to work with regulators, policymakers, and customers to find the best solutions for each region and market. Utilities will have to prepare for the increased demand and load from electrification while also integrating DERs that can offer both opportunities and challenges. To succeed in this transition, utilities will need to adopt a more proactive and holistic approach to planning and operating their distribution systems, using advanced data analytics, modeling, and simulation tools, smart grid technologies, and customer engagement strategies. Managing the butterfly effect will require software tools to manage the exchange of information between customers and work groups inside the utility. eTRACK+ is a system that can support the electrification transition by seamlessly moving data between consumers and utility operations. By doing so, utilities can ensure a reliable, resilient, and cost-effective transition to a low-carbon future.