Hi.

I'm Jeff Rea, your host for Economic Outlook.

Thanks for joining us.

Each week as we discuss the region's most important economic development initiatives with a panel of experts at the University of Notre Dame, Mendoza College of Business.

Ten years hence, initiative speakers explore issues, ideas and trends likely to affect business and society over the next decade.

Today, we're focusing on one of their most recent programs called Powering the Future Reimagining the Grid for tomorrow.

Recent announcements across Indiana in our region about data center projects by AWS and Microsoft have people asking a lot of questions about the power grid.

Today, we're diving deeper into the power grid with a couple of speakers who recently spoke on the topic at the University of Notre Dame as part of the ten Years Hence initiative.

Joining me today for that discussion are Sunny Elebua, the senior vice president, chief strategy and sustainability officer at Exelon.

Jeannene Jones, the executive vice president, chief financial officer at Exelon.

And Jim O'Rourke, the teaching professor of management organization at Mendoza College of Business.

Okay, so thank you for being here today.

Thanks for having us.

We really appreciate, just grabbing your time.

We're happy we're in town.

To to be able to have this discussion.

Jim, let me come your way for a little bit just just to help us understand, your role at Mendoza and a little bit about the ten years hence initiative.

Thanks, I appreciate it.

And thanks for your time.

I came to Notre Dame as a faculty member about 35 years ago.

I formally was a student here, and I was asked to begin a program in communication in the business school, essentially teaching students to write and speak better than they already do.

Corporate communication, change communication.

And the dean, Carolyn Woo at the time came to me and said, we have a program called foresight.

It's a course we ask our students to think about the future.

In groups of 5 to 8, students take on a big project and write a paper about it.

And it occurred to me that they were mostly dependent on things.

They could look up on the internet and find in the library.

I wanted them to meet people who actually thought about the future for a living, who did this for a living.

So this is our 22nd year with a course called ten years hence.

It's a lecture series open to the public.

They're welcome to come in if they like.

We had, probably, 15-18, members of the community this morning who came to sit in, the topics we take up are different each year.

We've talked about artificial intelligence.

We've talked about privacy.

We've talked about life beyond Earth and mining the asteroids and a variety of those things.

This year the theme is innovation.

So we're talking about how you make something new again and how you create something new.

And the first of our speakers were Sunny and Jeannene We have seven more speakers.

So let me put in a plug if you would like to come hear our next speakers, go to ten years Hanse Notre Dame as a Google search string and they will.

Up comes the entire list of everyone there, and it'll also have the last 20 years worth of speakers.

There's some pretty impressive people there.

Members of Congress, chairman of the Joint Chiefs of Staff, others.

So we have seven more speakers, and they're going to come in and talk about how companies recognize opportunity and threat and how they innovate both to stay alive and to create greater value for their communities, their stakeholders.

So I think it's good for the students, but I think it's a nice link to the community as well.

And, you know, our guests will take questions and give the best answer they can.

And it's it's an opportunity not readily available elsewhere in town.

I love it.

I looked at the list in particular and circled a few of those.

I'd like to get back out there and do it, and we're grateful that you brought some great speakers.

And today we're going to ask Sunny and Jeanne, and we're going to look in their crystal ball a little bit and talk a little bit today.

But but first Jeanne, talk to us about Exelon and and sort of for people aren't familiar with it.

Tell us what it is.

Sure.

Exelon is the largest transmission and distribution utility in the country.

So we transmit, all the electricity and gas to 10.5 million customers that we are privileged to serve.

And it's, you know, thinking about, what professor O'Rourke talked about an innovation in our mix of, assets that we have.

We have four operating companies, and some of the largest cities in America.

We serve Baltimore in the surrounding areas.

And Maryland, Philadelphia and Pennsylvania, Chicago and Illinois, and then our nation's capital in Washington, DC.

And in that portfolio, Baltimore Gas and Electric, for example, was the first gas utility in the country.

So it's over 200 years old.

Commonwealth Edison in Chicago, was founded by someone we all know, Thomas Edison.

And so when we think about existing for the last 200 years, the amount of innovation that the company has had to go through has been critical.

But wanting to last another 200 years, what we need to do to innovate and make sure we stay ahead of the challenges.

So was just a wonderful sort of, opportunity to to participate in an election, a lecture series focused on innovation.

And I think the the topics so timely and Sunny, let me come your way.

So, so as I teased in the opening with, with major announcements about large users, that are going to use a lot of power, it's got everybody at city council meetings and such asking questions.

Is there going to be enough power and am I going to have to are you going to ration power to me?

Give us a little bit of the the state of the power industry today and kind of what's happening there.

Right.

I think the power industry today is being shaped by three key forces.

Right now we're seeing huge demand growth, mostly driven by data centers, but also domestic on shoring and, you know, advances in electrification.

People want to drive electric cars.

People want to use electric heat pumps, things like that.

So that's one we're seeing this huge demand surge, but we're also seeing, reduction in the existing supply stack too, because we're looking at retiring old uneconomic plants or plants that don't have the right environmental attributes because they're bad for the environment.

They emit a lot of greenhouse gases.

It's such a funny time to have that coincidence of like, huge demand and shortfall in supply.

And that is the tension that you're seeing and people are actually responding to.

And in addition to both of them, we're dealing with all of this at a time when, you know, we're seeing unprecedented challenges with the weather, particularly due to the longer term effects of climate change.

So you're navigating building a resilient grid at a point where you know, you're having demand shortfall, sorry, supply shortfall and huge spikes in demand.

What that means is we just have to be innovative.

We just have to think about how we bring new supply to the market.

We have to figure out how we optimize demand, and we also have to figure out how we keep the grid resilient and reliable and keep all of this, this huge trifecta, all affordable to all aspects of society.

That, to me, is why you're getting a lot of this feedback on people getting anxious about it.

Yeah.

You know, in this instance, you know, come and stay with this thought because the, we kind of joke about this crystal ball and needing to be looking at your crystal ball because like, these things don't happen very quick.

They're not they're not inexpensive.

So a lot of things have for to happen for you to be ready to, to meet that need you talk a little bit about, just as a company, how you prepare yourself for this rapidly changing environment.

Absolutely.

So we have economic development teams in all of our operating companies, and they are working directly with not only our everyday customers and seeing, you know, changes in, in, in electrification usage, but more notably with the data center companies.

And we want that economic development.

It's great for our communities, for taxes, for jobs, etc..

But, as we bring in that demand, making sure that we understand what's real, what's not real, I think there's a lot of questions, too.

We get questions from our policymakers is they're double counting here.

And so, for, for example, in Chicago area alone, through our economic development teams, we have 11GW of what we call high certainty data center load coming in within the next ten years.

That could realistically double the the demand that we see today in the Chicago area.

Now, it's not going to come in all overnight, but we also know if that's going to come in over the next ten years.

And it may take at at its fastest 5 to 6 years to build another plant in the service territory.

That modeling that we do, working with the customers, seeing what they're seeing, modeling out the time of the demand coming online and sharing that with who we work with.

In partnership with PJM, who's our regional transmission organization, sharing, letting them see what we see so that they can send the right price signals to generators to start building.

And, I think we're at a very pivotal point where if you don't start to see generators start to build, we might start to see other sort of forces come in to try and, think of more innovative ways, you know, whether it's, Pennsylvania and Texas are looking at cheaper financing for generators given the high interest rates.

You may have different players come in and start building some of the hyperscalers.

A regulated utility like us may be asked to step in and build generation.

So there's a coming together of all parties to say, how do we come up with the most cost efficient solution?

Because here's the demand we're seeing, and we know the supply needs to start keeping pace with with that demand is certainly coming.

Right.

And maybe just, having overall powered discussion.

So and so I think here in Indiana, just as an example, we're very reliant on coal.

And everybody says we've got to get rid of coal.

And then we start seeing, solar pop up.

But people say, I don't want to see solar panels, though.

And, and in my neighborhood.

And then we have, you know, and it's too cloudy here in the winter time too.

Right?

And and I'm just joking.

But it's.

Yeah, but and then and then wind and then and then we have two nuclear plants not too far from here.

One who is ready to be decommissioned, who's now being recommissioned because it's needed.

We've seen two major investments in power plants to help feed the grid.

Just talk to us a little bit about kind of the maybe the variety of some of those power sources.

And from a utility perspective, you know, kind of how you're approaching those different mediums here, right?

I mean, just thinking about it, there are some plants that run twenty four seven, you know, they essentially just run because they have on site fuel.

And they're essentially we call them baseload plants because they pretty much run all all through.

Now as demand rises, you know, you get some of the plants that are almost intermediate.

You can they can be called upon and they can actually dispatch and run for a good chunk of the time.

And then you have those that you call when there's like critical need.

And those are like your peaking plants, you know, but by the time you have huge spikes in demand now, the different types of plants actually fall into those categories.

What you tend to see happen is like the large plants, like the nuclear plants and the coal plants that typically baseload the run.

Most of the time they help satisfy your basic need for power.

And as you have increases in demand, you call on the more intermediate plant and the peaking plants, and those ones actually get dispatched as needed.

But in addition to the qualities along the dispatch curve, they're also like the attributes of those plants.

Things like renewables, like wind and or solar.

They actually generate energy when the renewable resources are available.

If you have right wind speeds or you have the sunshine and obviously they generate energy, but in the instance where they cannot, oh, you don't have the right, you know, you know, they cannot generate at those instances.

And that's why we call them intermittent plants.

So they generate intermittently for you to actually use them effectively.

You either have to couple them with a different technology source, like a battery storage, where you actually take their generation and store them in.

If you don't have need for them right away, you store the excess or you just, you know, pass it back into the grid and hope somebody else is using.

Somebody else uses them.

Now with the different types of generation comes a different challenge.

The real challenge we're having right now is the type of demand that we're seeing is what we call high density demand.

Most of these data centers, they want consistent power.

They want to run a lot because they're running this huge algorithms, these large language models.

Now, while you're doing that, you need to have more baseload.

Unfortunately, some of the environmental attributes of the old baseload plants, you know, don't really lend them to this, to being run economically anymore.

So as they exit the stack, we need to find ways to have new firm generation.

And that's what Jeanne was just referring to right now, the need for us to begin to look at how the market responds to bring in this new generation online, but even more importantly, what needs to happen in the event that the market doesn't respond adequately.

And that's what we're seeing in PJM, where you have instances where the market cannot respond fast enough and you need more innovative solutions, and those innovative solutions could come from a variety of sources.

It could come from customers bringing their own generation to market or the utilities stepping in.

In addition to trying to fix the problem with the wholesale market, renewable resources.

The great.

I want to make sure I re-emphasize that, you know, but the truth is they're intermittent and they just don't meet the demand profile of what we're seeing with the huge spikes in demand.

So you need more firm resources, and you need someone who is capable of building such huge projects in an economic manner and socializing the costs in a manner that it's affordable to all your customers.

Jim, let's come your way.

So you had a chance to to hear both of them, to, see students, you know, interact.

What what's the what's on the mind of people at the university as they're hearing this discussion this morning?

Well, one thing the university wants to do is walk the walk.

You can talk about saving energy or investing in this or that.

The university says, we've got to put our money where the talk is.

So I as a business school professor, I've been really interested to watch over the last 5 to 7 years the partnerships between the university and the South Bend community.

One of them was on a hydroelectric power, opportunity in which we diverted the Saint Joe's River briefly in order to dig a large hole and put in generation capacity, cover it up, and then revert the river to run over it.

So it is continuous generation.

It's a lot, but it's important.

And the second of the most recent initiatives has been in geothermal, when they put up the new addition to the stadium and those, buildings around it, we made the decision to go into the earth and to tap the the heat in the core of the Earth and to pump water down, in which you can extract, weather sometimes plays a role, but for about a half a dozen very large parking lots around the stadium, around the athletic center, the hockey rink elsewhere, we dug eight feet into the earth, put down all of the piping and equipment, brought the dirt back in.

I periodically come to campus, all queued up behind 7 or 8 dump trucks full of dirt, and we paved it over.

You cannot even see it now, but it will, at peak capacity, provide about one third of the energy demand for the university.

And I'm I'm young enough to remember that just across Douglas Road we had huge mounds of coal and we would shovel that into the energy plant and we would say, well, good luck to the environment.

But now that mound of coal is gone, we're looking at renewables.

But as Sunny said, we recognize those in some ways can be intermittent.

I like hydro, that river just keeps flowing and the earth is not going to go cold at the core anytime soon.

So I like the, the steady baseload to that.

But the university is always on the lookout for ways to collaborate with the community in what is in everybody's best interest.

Yeah, interesting.

We just had Paul Kemp from the university on talking solar, even new solar field on the west side of the campus there by the news studio.

So a great testament to all the different things.

And in a nice example of as a community, we've got to have of sources day in and day, what you can do if you put your mind to it and if they say, well, if, you know, a small university in the middle of the Midwest can do this, I can do it back in my hometown.

Yeah.

Jeanne was coming right up the maybe the tough question.

So.

So consumers are, as they're showing up at, public hearings and we're talking about AWS and, and Microsoft and all the power that they need all in the right way in their head, have this feel that their electric bill is going to go from here, to here and why.

And so, talk about just, balancing kind of, you know, kind of the being reasonable on the consumer side, but paying for improvements to help consumers better understand how you think through some of that.

Absolutely.

And there's no silver bullet, just like there's no one generating source that is going to be perfect for everything.

We have to attack affordability for our customers on several fronts.

So the first thing we do is make sure that we are being very efficient with our operating costs.

And I think the size and scale of a large organization allows us to operate very efficiently so that we have ongoing sort of innovation remediation sessions.

How do we become more efficient?

A couple examples of that.

We've started using drones, to take down trees, trees actually, and what we call vegetation, and when it's overgrown can be some of the largest factors for outages.

And so what we used to have to do was send, you know, personnel in to take down.

We now use drones, which used to take about two days for a crew of, men and women, about 45 minutes.

And so constantly thinking about how can we be more efficient?

Secondarily, it's working with while we don't own generation and we don't build it, that actually helps us as we work with policymakers to think about what generation do you want to bring into your state, what is going to be most cost effective?

And having that just going back to what you're talking about, a diversified portfolio is always, you know, it tends to be the best.

The other thing that we try to do is, the cheapest, you know, megawatt is the one that you don't use.

And so we spend nearly $900 million a year across our states on what we call energy efficiency programs, going into homes and businesses and helping our customers consume less.

The effect of those programs, the number of megawatt hours we've had our customers save is the equivalent of taking about 14 million cars off the road in a given year.

So that's been meaningful for our customers.

And then the last is we try to connect our customers with as much assistance as we can, working towards whether it's state programs, federal programs.

Over the last several years, we've increased that the our the amount coming to our customers by 20% back to back.

So, these are low income housing, energy assistance programs, etc., making sure those dollars come to our customers and they know how to, how to get them.

So, no one silver bullet, but it's something that keeps all of us as a leadership team up at night because, what we also know is, while there is a cost to this energy transition, there's a cost to not doing it.

So you look at some of the storms that we've seen, winter Storm Uri in Texas was an 80 to 130 ish billion dollar storm.

The aftermath of it, in addition to that, lives were lost.

So, so.

And you can look around, you know, the effects of climate change, the effects of not having a resilient grid, the cost of not taking action is greater than the cost of taking action.

But we know, our job is to make it as affordable as possible.

And we always say the companies that do it affordably will be able to do it sustainably.

So it's something that will come your way.

And perhaps, maybe a more basic question I should ask earlier, but but help us understand the the grid, if you will.

We kind of use the term with sort of the understanding everybody knows what that is.

But, but, but but if somebody does understand that, you know, as I'm understanding you, these different pools that you're pulling power from and distributing, explain it in layman's terms to help us if we don't know exactly the grid.

Well, you think about the grid as made up of like 3 or 4 different parts.

There's a generation part where you have, you know, huge or sometimes distributed forms of generation.

There's a places where you generate the electricity and then that electricity needs to be put through what we're call like this huge corridors that we call it transmission infrasound rupture.

And that transmission infrastructure carries it from like widespread produce to like huge load centers.

We'll call this load centers.

That could be things like huge cities, areas where you have huge demand that get stepped down to like the distribution level and not the distribution level.

The wires actually end up taking it to the homes where it's actually used.

The grid comprises the generation side as well as the the wires that actually carry it from the generation to the home.

Now, some folks may traditionally look at the grid as just wires, but the holistic grid includes generation, and it's more important to have that view because in most instances, it's the traditional grid used to be almost linear from like generation down to end use.

What we're seeing now is because of the recent developments in the ability to self generate.

You can put a solar panel in your house.

You can put, you know, battery systems in behind the meter.

We're beginning to see energy flows just sort of change a little bit.

So grid now includes not just the ability to generate at a location and get to another location, but the ability to optimize what happens a little bit behind the meter as well.

And that whole interaction of what happens in the home, what happens in the wire system and what happens in the centralized generation makes up the grid.

This distinction is super important for a very good reason.

Each one of those contributes different attributes to it.

So if I want to manage someone's load here, I could send signals that changes how you use electricity in your home.

Because your home is part of the grid and the wires that connect your home connect someone else who's actually having a different demand profile from you.

So in simple terms, wires, generation homes.

I appreciate it.

I should have asked that earlier.

That's really helpful to understand that, genius come your way as we get to our last 3 or 4 minutes or so.

Obviously in Washington, there's a lot of talk about this at everybody's state House.

There's a lot of talk about it.

What are are there things that the utilities need to sort of help give you the flexibility to kind of be forward thinking?

What are the what are the things you need most to sort of help you keep up with the demand on, on the grid?

Yeah.

So I think, transmission, transmission is going to be a key part of this solution.

So, you know, there are there are instances where instead of having to build a new generation plant, you can build a transmission lines that can bring in excess generation from other parts of the country.

We are doing this in Maryland, for example, we we see a coal plant retiring.

It's on a reliability must run contract right now, which is customers are paying for.

As we build this transmission line, customers will come off of that contract supporting that plant, and they'll pay for the transmission, which is cheaper than keeping that plan on line.

So but transmission is, a very expensive construction project and there are siting and permitting and, getting access to right away so that, working with our state and the federal government on how to make that a more, efficient process would be great.

In addition to that, we're working with our states to think about how do you get that generation built faster.

And so, but we partner partnerships.

We talked a lot about.

And Professor Work's class day partnerships are so key.

We can't do this alone.

We need to be hearing from our customers, whether it's sort of the homes that we serve.

Families in homes, or whether it's these new hyperscaler companies that are our new customers and we're learning a lot from them, but also our governors who want that economic development but want to make sure the rest of the customer base is protected.

So thinking about how do they what what, mechanisms do they have to get generators to come and, and marry up what we call, additionality.

So if you're going to bring that extra load, how do you bring the additional generation.

So working with them on that.

So I think it's going to take partnerships, innovative thinking, really not relying on the old way of doing things.

Because as Sunny talked about these three new themes, the incremental demand, the change in the generation stack and the the increasingly volatile weather, the old way of running the grid is not going to, allow us to overcome these challenges.

The last thing I'll say is we have to, you know, think about how we, charge our customers, how our customers pay for these.

We're working with innovative ways.

It is going to be an expensive transition, but is there a way for customers to pay over time?

Is there a way to, change the way that we, allocate those costs so that working again with our state commissions, just thinking about how do you make this as affordable as possible?

Great guys.

Thank you.

Phenomenal discussion I appreciate it I'm sorry I missed the the discussion in the in in there.

But glad you came here.

Welcome next week.

So I'll I think I'll have to put that on my schedule.

So Sunny Elebua Senior Vice President Chief Strategy Officer Excellent.

Jeanne Jones from excellent.

And and Jim O'Rourke from the Mendoza College of Business.

Thank you guys for being here today.

Really appreciate it.

Thank that's it for our show today.

Thank you for watching or listening to our podcast Find Economic Outlook at WNIT.org YouTube and most major podcast platforms like us on Facebook, follow us on Twitter.

I'm Jeff Rea I'll see you next time.

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