If the burgeoning crop of new technology tools for wildfire prevention were designed for anyone, Pacific Gas & Electric would be the poster child.
Nearly six years removed from bankruptcy after a settlement for its role in the catastrophic 2018 Camp Fire in California, the Oakland-based utility is pursuing a round-the-clock monitoring program for power outages and wildfires. It pulls readings from 5.5 million meters that flag compromised infrastructure, 1,600 weather monitoring stations that use artificial intelligence to forecast fire-risk conditions and 600 infrared cameras trained on faint flickers to detect wildfires across its service territory.
But PG&E is facing resistance to the needed spending on the program from state regulators who are focused on keeping costs under control for residents and businesses.
The advent of AI-supported software and hardware offers electric utilities powerful new technology to more efficiently manage power resources, extend the lifelines of expensive equipment and quickly respond to costly power outages. But the strain of rising power prices has created hurdles that are often keeping those innovative models out of the hands of electricity providers.
Advocates of those new technologies said a years-long pattern of rejection from regulators has chilled the pursuit of those new tools — even as power companies are struggling to keep up with the demand from their massive data centers.
“The system bias exists,” said Kim Getgen, founder of InnovationForce, an organization that has set up a clearinghouse to connect new tech providers with utilities for pressing projects. “It’s been very hard for status quo-thinking utilities that have always dealt with incremental change to now have to bring in really, truly disruptive new ideas into their business.”
North Carolina regulators in 2018 denied Duke Energy’s request to recover costs for software and line sensors to adjust voltage to reduce power loss as electricity flows through distribution wires. Hawaii regulators that year did not allow Hawaii Electric Co. to pass on costs for software to integrate disparate microgrids onto the broader grid. Illinois regulators in 2020 declined to let utilities pass along costs to customers for cloud-based computing used to manage renewable resources.
PG&E Vice President for Wildfire Mitigation Andrew Abranches has been doing the math to show the state regulator that benefits from pouring $45 million into the technology and operations will ultimately reduce costs.
“We’ll just deploy it at a slower pace,” Abranches said. “We think we can get value to society by doing it faster. But we need to get everyone comfortable that they understand this is a game-changing technology.”
The AI toolbox
Wildfire prevention is just one example where AI tech could be a game changer.
Service restoration crews are using advanced forecasting products to position closer to trouble spots before extreme weather arrives. Modeler Climavision helped Houston-based CenterPoint Energy avoid costly, unnecessary crew dispatch when it accurately predicted Winter Storm Fern would not significantly affect its service territory in January.
Performance sensors are prolonging substation and transformer life cycles, and they’re aligning their operations with real-time weather conditions and electric performance to match the flow of power. Independent power operator NAES has tapped Pittsburgh-based Gecko Robotics to use its AI-driven robots to monitor performance of critical assets to avoid unplanned shutdowns and use resources more efficiently.
And AI software is juggling a broader array of energy sources and scheduling when to sell and buy power on spot markets.
Proponents of the technology argue their regulators have not fully appreciated how those applications can hold down rates that are climbing because of pressure from issues like supply chain shortages, maintenance and climate change-fueled disasters. But regulators, who are aware of the need to modernize the power networks, have often been reluctant to fold the costs for those programs into the electricity prices that have been rising faster than inflation in many parts of the country.
“When you have constricted, constrained transmission, constrained generation, you want to get the most out of the system,” said Ann Rendahl, a Washington utility commissioner and president of the National Association of Regulatory Utility Commissioners. “But I think the question is: How much are you going to spend to do that, and how much can customers bear at the moment?”
The public has largely blamed energy-hungry data centers for rising power bills. But from 2019 through 2024 the main culprit behind the price hikes was refurbishing or replacing existing transmission and distribution infrastructure — the poles, towers and wires that move electricity — according to an oft-cited Lawrence Berkeley National Laboratory and Brattle Group study. Damage and repairs from natural disasters like hurricanes and wildfires, particularly in California, were also a major factor.
The problem for the aging grid to keep up with the increasingly electrified economy and data center demand will get worse before it gets better. Analysts at JPMorgan project that U.S. utilities will spend $1 trillion upgrading transmission and distribution systems over the next decade, citing BloombergNEF research. Ratepayers will fund those investments.
Optimizing the power network
Amid supply chain constraints and long permitting timelines, many utilities see grid optimization technologies as a speedy way to avoid supply crunches and to address energy affordability challenges. Those ideas have attracted attention in Congress, state capitals and at the Federal Energy Regulatory Commission.
The House Energy and Commerce Committee held an April 29 hearing on a series of bills that would encourage adoption of AI technology on the grid. And a bipartisan group of governors in October urged congressional committee leaders to ensure that long-sought permitting legislation requires regional grid operators to prioritize fixes known collectively as “grid-enhancing technologies.”
“We need to create those incentives,” Sen. Martin Heinrich (D-N.M.), the top Democrat on the Senate Energy and Natural Resources Committee, told POLITICO. “The economic incentives are there. I think part of the challenge for some utilities and public regulatory commissions has been more cultural.”
President Donald Trump has thrown his administration’s weight behind the issue, with the Energy Department’s new $1.9 billion grant opportunity that aims to leverage more capacity out of transmission systems. And FERC is planning to hold a conference in July to spotlight how AI-driven solutions and grid-enhancing technologies can optimize power delivery and reduce costs, spokesperson Celeste Miller said in a statement.
Bloomington, Minnesota, based utility software company OATI applied for a slice of that DOE funding, which the firm said is crucial for providing federal direction to the web of grid infrastructure owners and operators. Chief Operations Officer Kevin Sarkinen said his firm’s digital products would more efficiently bring the increasingly diverse array of energy sources onto the grid in real-time and maximize their response to weather conditions to increase electricity capacity.
“It lowers the prices as you eliminate transmission bottlenecks. It enables transactions to flow from cheaper resources,” he said.
But regulators routinely reject letting utilities charge customers for those services, said Getgen, the InnovationForce founder. She said that is a roadblock to innovation.
So-called “non-wires alternatives” can tame rates, Getgen said, but the up-front costs are often not cheap. Shunning those investments instead bakes in the traditional model of raising rates on customers to build more power generation and distribution — an option that has gotten more expensive amid tight energy supply chains and permitting bottlenecks.
“Where are the incentives in the system to do things differently?” Getgen said. “Will it come from regulators in the way they approve rate cases? They have the power to do that. On the other side, within the utility, what’s the lever that you can pull differently? Why wait for the stick?”
A group of electricity industry companies are planning to call attention to the range of options with regulators and utilities, said Karen Wayland, CEO of the GridWise Alliance. Her organization last month published a report that named eight different grid uses for AI, including asset management like controlling outage-causing vegetation, bolstering reliability through enhanced extreme weather analysis and improving grid operations by flexibly managing distributed energy and adjusting power flow.
Many roadblocks exist, Wayland said. Consumer advocates have raised worries utilities are trying to “goldplate the system” with expensive upgrades that offer little in tangible benefits when they ask to pass costs onto ratepayers.
Utilities also fear introducing cybersecurity vulnerabilities, and training workers to use new systems is resource-intensive. On top of that, the range of solutions on offer now is overwhelming — but there is little industry knowledge or clarity about what works and what doesn’t.
But Wayland said leveraging AI tools is essential since utilities are not likely to add new power quickly enough to match surging demand.
“It’s really putting a focus on asset management and how you can better manage the assets that you have out in the field to reduce the cost of maintaining and replacing them,” she said.
Those conversations would benefit companies like Uplight. The firm has helped utilities harness more electric capacity through AI machine learning that pulls distributed energy resources, such as rooftop solar onto the grid. But regulators’ reticence to let utilities spread the cost of services to customers has constrained some deals, said Dave Sheehan, vice president of industry solutions at Uplight.
“For them to be truly treated as an equal — as they should be and as they are from their value perspective across the entire industry — I would say that that would make a really big impact,” Sheehan said.
Some states are beginning to take notice. Maine and Virginia now require regulators to consider non-wires alternatives before committing to pricey construction projects. New York mitigated substation maintenance spending through a partnership with C3 AI, which analyzed activity from millions of smart electricity meters to adjust substation voltage in the Con Edison market.
The enhanced attention to the twin challenges of rising electricity rates and supply chain limitations have also driven more utilities to consider AI solutions, said Mishal Thadani, CEO of Rhizome Data. Thadani’s firm has helped more than a dozen utilities identify critical threats to infrastructure through AI climate modeling. That can contain costly capital projects over the long term.
Thadani said a majority of his firm’s new business stems from utilities responding to “much more diligent” regulators. He said energy affordability is at the heart of regulators’ scrutiny.
“Utilities really haven’t had to show all of the math behind their investments as traditionally they’ve been on an as-needed basis,” he said. “Regulators really have not been asking for that quantitative type of risk-based cost-benefit analysis. Now, they have.”
