S+B: How centralized are Southern’s innovation practices?
FANNING: They are very centralized, but we try to maintain what might be called a “push–pull” system. The “push” side is headed by Chris Hobson, the senior vice president of research and environmental affairs and our chief environmental officer. Chris is involved with our portfolio of energy solutions for customers, whether that’s generation or transmission. He convenes his own meetings with people in the operating companies, which involves both compliance-related and market-related issues.
Another entity on the push side is our R&D group, headquartered in Birmingham, Ala. We also have a large facility in Wilsonville, Ala., that’s dedicated to our gasification and carbon capture technologies. We’re the only power company in the U.S. conducting carbon capture research in this manner, on both a post-combustion and pre-combustion basis. We leverage the full range of our technology research, assessment, and deployment projects all around the system. Our scientists come to us saying, “Here’s something I’ve got. Where else in the company can we use it?”
The “pull” side involves regular meetings between our innovation people and the marketing and power generation planning teams. This allows the innovation team to discuss the company’s operational challenges and to identify opportunities.
S+B: What about the role of external partners?
FANNING: Typically, we work with other companies on one-off or two-off projects, to put big money into big ideas. Examples of this include our scrubber technology work with Chiyoda, the development of our new coal gasification plant in Mississippi, and the CO2 filter research we’ve done with Mitsubishi. The goal is to share the significant fixed costs of some of these projects.
Like many other companies, we partner with and support research at a number of universities, working directly with the schools on technological issues. At our carbon capture research center, for instance, we divert some of the post-combustion gas streams from an operating coal plant into a series of bays in the research shop. Then we invite universities with strong research proposals to plug into the gas streams and apply their technology solutions to capturing the carbon in the streams. We pick out the best ideas, and we get to use some of what they learn during their experiments.
We also hold regular customer forums where we show people our new ideas and gather feedback. Much of this work involves our IT organization, which has become an integral part of how we deliver energy to customers.
S+B: How do smart grids and smart metering factor into your delivery scheme?
FANNING: Southern Company had about 4.4 million operational smart meters by the end of 2012, which is the second-largest smart meter deployment in the United States. Those smart meters are already reducing the number of vehicles on the road. In fact, Southern Company has avoided approximately 40 million miles of driving since the program began. It’s good for our bottom line, for the environment, and for customers.
There have also been some remarkable unplanned consequences. When devastating tornadoes went through Alabama in April 2011, we could tell immediately from our electronic map which neighborhoods were out of power, because we could see which smart meters were still working. That enabled us to deploy our restoration crews more effectively. The use of smart meters contributed significantly to the company’s fast response and successful restoration efforts.
In the longer term, smart meters may be the gateway to the so-called smart home. But we’re taking a prudent, measured approach. We’re not going to act hastily, because of cybersecurity concerns. It is better to move slowly and deliberately, and get it right. Given how important our service is to our customers, we will not expose their personal information—and the Southeast electric network—to threats. This is an important issue, and we will not take unnecessary chances simply in a rush to be first.