Geisha Williams, the first Latina CEO of a Fortune 500 company, is on a mission to deep clean PG&E's power mix. Given that electricity is responsible for 28 percent of U.S. greenhouse gas emissions and PG&E is the 5th largest utility in the U.S. based on market value, these are not table stakes.
PG&E is one of the cleanest utilities in the country so she has a head start. In 2016, the San-Francisco-based utility was first in the country for millions of megawatts of renewables sold and second for renewables as a percentage of sales. PG&E now derives 79 percent of its energy from renewable sources and is bullish on more. Williams, the child of Cuban political refugees, is quite literally leading the clean energy revolution.
Electric utilities have historically used long term planning – on the order of 10, 20, and 30 year horizons – to procure power contracts. Long term planning has historically been a key component of managing costs, maintaining the electric grid, and keeping electricity prices stable as a regulated monopoly.
Solar, wind power and battery technology have come along much more quickly than one might have predicted 30 years ago, which leaves the regulated monopolies in a tough bind. They want to provide the clean energy customers desire, but in many cases they may be locked into long term contracts for dirtier or less efficient energy than is currently available on the market. Small-scale solar is reaching cost parity with the rates offered by utilities and many companies are turning to solar installations as an affordable way to reduce carbon impact.
PG&E is in a better situation than many utilities, having jumped on the clean energy revolution earlier than some competitors. But it still faces the same challenging operating environment of heavy infrastructure costs and legacy contracts.
Williams wisely chooses to see this as a glass half full. At the recent CECP CEO Investor Forum in San Francisco, she opened inspirationally, “We have an amazingly powerful convergence of three-things: forward-looking policy [at the state level in California], consumers eager for change and a technological revolution. Few other companies are better situated than we are.”
She pointed to PG&E’s historical focus on safety and affordability as keys to taking advantage alongside the electric grid, which she called an “enormously valuable asset. We believe it is fundamental to the revolution and key to delivering safe, reliable, affordable clean energy to nearly 16 million Californians.”
It’s an interesting perspective. The electric grid was an incredible innovation. It brings power hundreds of miles from mammoth energy generating centers to individual residences. The scale of today’s grids used to be their biggest asset because they allow the utility to switch energy providers with the flick of a button without interrupting the consumer experience. And the scale keeps costs down.
But, recent technological advancements in solar and wind energy capture, battery storage technology and micro grids, there might be a better way to mash the potatoes. If we were to start from scratch today, it is doubtful that we’d rely on electric grids so large a bad storm can take out power on the whole eastern seaboard.
These moving forces, and staying ahead of them, is clearly on PG&E’s radar. Part of the challenge will be broadening the definition of “sustainable energy” beyond just being carbon free. Williams explains, “It’s not sustainable if it’s not safe, reliable, affordable and clean.” Safety and reliability are bedrocks of the grid model and one of PG&E's clear competitive advantages.
Over the past 20 years, PG&E has largely been a partner with the state as it moves to reduce climate change emissions from electricity. And this partnership, along with a clear eye toward the technical innovations that will impact customer energy needs, will keep PG&E and “Big Power” from gradually losing market share.
According to Williams, PG&E was the first company in the utility industry to make a formal commitment to action on climate change. The state passed landmark AB32 in 2005 to reduce GHG emissions to 1990 levels by 2020 and shortly thereafter set the state’s renewables targets at 33 percent by 2020. PG&E met that goal three years early. The state has continued to ramp up renewables targets, and PG&E has continued to meet and exceed the goals it sets to help the state comply. California is now requiring 50 percent of the state’s electricity to be renewably generated by 2030. With PG&E already at 79 percent renewables, the clean energy leader thinks it can get the state to 55 percent renewables by 2031. Williams is not overstating things when she says “It’s not a transition, it's a transformation.”
The utility is projecting a massive shift to electrification in transportation as the costs of electric vehicles continue to come down and the state continues to incentivize low carbon transport.
The company is well positioned to capitalize on the projected two million clean vehicles that will be seeking to power up via the grid by 2030. PG&E is investing in charging infrastructure with 7,500 public charging stations planned in its service area to support and encourage this transition.
With two times more carbon-free and renewable energy than us average (79 percent vs. 38 percent), Williams plans for PG&E to be an example of a profitable transition for utility companies, not a “cautionary tale of costs run amok.”
With Williams at the helm it seems quite possible.
Jen Boynton is the former Editor-in-Chief of TriplePundit. She has an MBA in Sustainable Management from the Presidio Graduate School and has helped organizations including SAP, PwC and Fair Trade USA with their sustainability communications messaging. She is based in San Diego, California. When she's not at work, she volunteers as a CASA (court appointed special advocate) for children in the foster care system. She enjoys losing fights with toddlers and eating toast scraps. She lives with her family in sunny San Diego.