Lauren Azar | The Future of Energy in America
The world today is better than ever and one of the foundational reasons for this is because of access to energy. We have gas to power our cars and planes, electricity to run our appliances, natural gas, and other sources to control the heat in our homes. Dubai and Las Vegas don’t exist without cheap energy to power them.
Conversations surrounding energy sources, energy consumption, and ways to use energy efficiently have been on the rise. Alternative sources to coal have emerged with solar, wind, and hydroelectric as front runners. As America strives to optimize energy use, innovations such as battery storage, the Internet of Things, and Artificial Intelligence will be disruptive.
In this interview, Lauren Azar draws on her 25 years of experience working in the energy sector. She talks about why coal is not a viable, long-term source of energy, how new technologies will make energy consumption cheaper, and where America’s energy is most vulnerable from security threats. Lauren also candidly discusses how to get more girls and young women involved in energy and other STEM careers.
Over the course of her career, Lauren Azar has worked at the federal government level as Senior Advisor to the Secretary of the Department of Energy, at the state government level as Commissioner at the Public Service Commission of Wisconsin, and in the private sector as an attorney representing utilities and utility customers.
Lauren Azar:
I walked into a room where a number of representatives were from Wall Street, probably about 30 people, all around a big room, a big table, and they were all men. And I walked up to the head of the table, and before even sitting down, I said, “Where are the women?” There was some stuttering and they did acknowledge that they would try to do better the next time. I just would hope that whether you're a man or a woman and you walk into a room and everybody at the table looks the same, you call it out.
Don MacPherson:
If you have ever wondered what separates top performers from everyone else, you probably discovered it is just a couple differentiators that determine wild success from average results. My name is Don MacPherson, and for two decades, I've been working with executives to help them optimize performance at the individual, team, and organization levels. Now I interview exceptional performers in athletics, music, entertainment, and business, so we can all learn from them. Welcome to 12 Geniuses.
The world is better than ever. And one of the foundational reasons for this is because of access to energy, gas to power our cars and planes, electricity to run our appliances, natural gas and other sources to control the heat in our homes. Dubai and Las Vegas don't exist without cheap energy to power them. Our guest today is Lauren Azar. For more than two decades, she has been deeply involved in energy policy in the United States, including a role as advisor to the Department of Energy. Like every sector or industry, the energy sector is not immune to disruption. That is exactly what Lauren is going to discuss with us today.
Lauren, welcome to 12 Geniuses.
Lauren Azar:
Hi, how are you doing?
Don MacPherson:
Doing great.
Lauren Azar:
Outstanding.
Don MacPherson:
Glad to be here in Madison, Wisconsin on a beautiful December afternoon. Let's start with your background. When did you decide to get involved in the energy industry?
Lauren Azar:
It all started actually when I was quite little because I loved to know how things worked. So, I would, for instance, look at the water going down the drain and wonder, where did that go? And it just took one step after another from that.
Don MacPherson:
What are some of the qualifications that have prepared you for this industry?
Lauren Azar:
Probably number one would be my law degree because a lot of this is policy-making and understanding, weighing and balancing a lot of different factors, as well as understanding what's required by the law. Number one would be the law degree. I do have some scientific acumen, which certainly helps in understanding the technologies. Those would be the two largest things. I learned a lot on the job as well. It's not as though, at least when I was learning this industry, there were not a lot of courses in the kinds of things I'm doing now. That has changed. If you go to the local university here, they have a whole curriculum around energy issues.
Don MacPherson:
Who are some of your mentors and how have they helped you in your advancement?
Lauren Azar:
It's interesting because again, when I was coming up in the ranks mentors were not all that common. There were certainly a lot of people that helped me succeed and go forward, but there was not a specific mentor. I've been thinking about this question because once I started to advance in my career, I actually had young men come up to me and explicitly ask me to be their mentors, but no young women have ever done that, which I found curious. I know, for myself, I did not feel like I should reach out and ask for a mentor because I was worried that was going to indicate some sort of weakness or insufficiency on my part.
Don MacPherson:
You mentioned that young women weren't asking. What advice do you have for a young woman who needs a mentor?
Lauren Azar:
Absolutely get a mentor. It does not mean; it does not indicate any weakness. In fact, it indicates a maturity and strength if you go and ask somebody to be their mentor. I'd also recommend that you find a mentor that ultimately, to the extent you work well together, that he or she could help you in your future to move up. And also, I'd recommend meeting regularly, even though you may not talk about anything specific, it just helps to have those regular meetings with a mentor.
Don MacPherson:
One of the things I find interesting about mentorship is typically the mentee feels that they're just taking from the mentor, but oftentimes, they don't realize what they're contributing to the mentor. Do you agree with that?
Lauren Azar:
Absolutely. Because they're asking more basic questions than you normally do in your everyday lives. And sometimes it's really good to go back to basics because it helps you see further into the future.
Don MacPherson:
So, your first job in the energy fields, was it as an attorney?
Lauren Azar:
Yes.
Don MacPherson:
Okay. What were you doing?
Lauren Azar:
We were representing public utilities in getting permits, getting their rates approved, things along those lines.
Don MacPherson:
And then where did it go from there?
Lauren Azar:
Governor Doyle actually appointed me to become a public service commissioner in Wisconsin. Which means I, along with two other people, regulated the public utilities in Wisconsin. Then after that, I became the senior advisor to the Secretary of the U.S. Department of Energy. And I am now back in private practice, helping clients both in the private and public sector in the electricity industry.
Don MacPherson:
What was the biggest surprise about working for the federal government?
Lauren Azar:
In the federal government, there are two sort of sets of employees. One are career staff, and they are there no matter who, what political party is in charge. Then there are political appointees. And they come and go with whomever is in charge. With regards to the political appointees, I was told that there are really two types. There's one type that is there because they really believe in the cause and they want to do good. And there's the other type that they're there to get their next position. The motivations of the political appointees actually, it was quite stark as to the kind of activities they would do depending on which class they were in.
Don MacPherson:
And you could see this almost immediately?
Lauren Azar:
I'm sure smarter person could. It took me a little while to figure out which buckets people were in.
Don MacPherson:
And you had an opportunity to work with Secretary Chu.
Lauren Azar:
Absolutely. So, Secretary Steven Chu is a Nobel Laureate and did not come from the energy field. So, he was the secretary of the Department of Energy. He certainly had a vision that obviously President Obama believed in as to energy in our nation. Delightful and curious man. Even though he was not, necessarily, had a hefty background in a lot of these areas, he was very curious. He would take in information, he'd be able to analyze it very quickly and come up with decisions.
Don MacPherson:
It sounds like, at that level, you'd have to be very collaborative if you don't have that background. How did he facilitate collaboration among the people who were working with him?
Lauren Azar:
One of the things that shocked me is I found, the further up you get in the decision-making hierarchy at the federal government, the more assimilated the information becomes. At each level, you have to condense the information so that somebody above you can make a decision. And when you get to the secretarial level, the amount of, essentially, huge amounts of information need to be pulled together and put in nice little packets so that somebody like Secretary Chu can read the materials, come up to speed very quickly, understand what the critical points are, and make an informed decision. The collaboration actually happened in the collection of all of that information, into whatever briefing materials were going to be presented.
Don MacPherson:
What lessons did you learn in Washington that you're applying today in your practice?
Lauren Azar:
It's very important to know who the decision maker is and whatever problem or endeavor you're trying to accomplish in front of you. As a lawyer, I often look to the law, right? To see who has the authority to make that decision. But there is hard power, which is what I just described, but there's also soft power. And sometimes soft power, actually, is the driving force behind what happens.
Don MacPherson:
When you talk about soft power and hard power, can you give examples of what's the distinction between the two?
Lauren Azar:
Sure. With regards to hard power, it is the person who legally is responsible for making a decision. They have the legal authority, or they have, if you're in an organization that they are designated, the person who has the authority to make that decision. For soft power, there may be a lot of people behind the scenes that are actually making the decisions and they may not be in the chain of command. Knowing actually who's making the decision is critical.
Don MacPherson:
There are lots of stories in the news about the desire of need to have more people go into STEM fields, science, technology, engineering, mathematics, and lots of stories that we need more young girls, more women to be in these STEM studies. The energy sector has fewer women than, even in tech. And you hear stories about technology and how they're underrepresented by women. What advice do you have to girls or young women who are considering a career in a STEM field?
Lauren Azar:
Go for it. Number one, go for it. When I started off in my career, working in utilities, I was usually the only woman in the room, but that has already changed. So, there are more and more women going into the fields. There, for instance, are a lot more women CEOs of very large public utilities in the United States. Women are becoming more common in the field, but by the same token, we still are, by far, a minority in the field. Some of my advice would be, be the absolute best you can be because technical competence is fundamental to being able to move forward and have people listen to you. But also, emotional intelligence is very important. I say that out of experience because I was taught to be very technically competent, which I became.
And I undervalued the relationships as I was moving up. Building relationships and understanding how people work together is critical in your career, in addition to the numbers and the formulas.
Don MacPherson:
You shared an interesting story about a boardroom and 30 people from Wall Street coming in. Would you recount that for our audience, because I think it's really central to this idea of encouraging young girls and women to be a part of the energy industry.
Lauren Azar:
Sure. Many utilities are publicly traded. So, Wall Street is very interested in how those utilities are going to be regulated, and they want to come in and talk to commissioners. I was having my Wall Street meeting, I walked into a room where a number of representatives were from Wall Street, probably about 30 people, all around a big room, a big table, and they were all men. And I walked up to the head of the table. And before even sitting down, I said, “Where are the women?” There was some stuttering and they did acknowledge that they would try to do better the next time.
I just would hope that whether you're a man or a woman and you walk into a room and everybody at the table looks the same, you call it out. I would also note that if you're going into a highly technical field, don't forget the importance of communication skills. Because time and time again, I've run into folks that are fantastic on the technical side, but are incapable of actually communicating their conclusions or their thoughts to people that don't have the same level of technical expertise.
Don MacPherson:
Our guest today is energy expert, Lauren Azar. We just heard about her career journey and advice she has for people interested in a career in the energy sector. When we come back from this short break, we will discuss energy in the United States, including the future of coal, new and disruptive technologies, energy grid security, and the ways in which energy will change the way we live and work.
This is the best time in human history to be alive. People are living longer, healthier lives, millions of people are escaping abject poverty every year, and diseases that used to be a death sentence are on the ropes. But the world is changing quickly, too. Artificial intelligence, advanced robotics, 3D printing, the internet of things, and a host of other technologies will change the way we live and work. Is your organization ready for it? 12 Geniuses isn't just a podcast. We are an organization that educates leaders about the changing world of work, so you can harness new technologies, demographic changes, and innovative business models. To learn how 12 Geniuses can help prepare your leadership team to take advantage of the changes that will shape the next decade, check us out at 12geniuses.com.
We are back with energy expert, Lauren Azar. We just heard about how she became one of the most powerful women in the energy field. Now we're going to turn our attention to the future of energy here in the United States.
Lauren, we've got a very diverse audience here, and we're going to talk about some very technical things in part two here. We're going to talk about the future of energy, the future of the electricity grid in the United States. So, just keep in mind that you're going to keep things simple for us, right?
Lauren Azar:
I will absolutely keep things simple. And, as a result of simplifying things, they may not be precisely accurate in all situations.
Don MacPherson:
Okay. When we met this summer, you were describing how energy policy is planned in the United States. Can you walk us through what it looks like and how far into the distance this energy policy planning takes place?
Lauren Azar:
When you are planning for how much generation to build, a utility will look at and determine how much electricity their customers are going to need five or 10 years out. Then they add a little extra because you never know if it's going to become super-hot in that year and more electricity will be needed. Then you determine if you actually can, essentially, produce that amount of electricity with your existing generators. And if you can't, then you've got to buy it somewhere else. That's either by building your own new generator or purchasing it from somebody else.
Don MacPherson:
When you talk about adding a little bit on top to hit peak levels, what percentage are you talking about?
Lauren Azar:
Well, that's a art in and of itself. It's called the reserve margin. For instance, in Wisconsin, we were looking at, I believe, a 12% reserve margin. In other areas, I know it's 7%. Part of the answer to that question depends on how strong your transmission grid is. Because if you have a really strong transmission grid in your state, you would be able to purchase electricity outside of your state. So, in other words, you then wouldn't need as much generation within your state. We know whatever we come up with is going to be wrong. What we want to do is develop a plan and develop the infrastructure that would allow for a variety of outcomes.
Don MacPherson:
So, it's almost like building a number of lanes on a highway.
Lauren Azar:
Right. Yes. And when you're looking at electricity, you're looking at, weather is a huge component, populations are huge component. The technologies, as you pointed out, are also very important. For instance, as electric vehicles grow, that the amount of electricities that's gonna be needed for electric vehicles is going to increase the need for generation.
Don MacPherson:
What kind of security vulnerabilities do we have with our current electrical grid system and what's being done to reduce those risks?
Lauren Azar:
So, there are challenges with regards to the security of the grid, and they come, both from natural sources, as well as human sources. From natural sources, it's primarily extreme weather. When we see blackouts now in the United States, they are mostly related to extreme weather. And that would also include flooding. Solar flares are also a problem with regards to a threat to the grid, that if there are pretty significant geomagnetic disturbances, it essentially fries components of the grid, which is not what you want, is a fried grid. As far as humans, there are a number of things.
Cybersecurity is probably top on everybody's list. A number of countries have already been hit with cyberattacks, and they have successfully brought down the grid. So, we are constantly, in the United States, looking at cybersecurity. Physical threats are also on the rise, unfortunately. There's a primary example of a substation in California that 17 different transformers were shot out by, we don't know how many people, but it was a very sophisticated attack. They cut the fiber-optic cables first so that nobody could see them, and then they shot out these 17 transformers.
There's also, which is really dramatic and we hope it will never happen, it's called an electromagnetic pulse, which is the explosion of a nuclear weapon in the atmosphere. And we're continuing to study exactly what impact that will have on the grid, but the expectations are, it could be catastrophic.
Don MacPherson:
Coal was a big topic of discussion during the 2016 U.S. presidential election. Candidate Trump, and now President Trump, talked about restoring the coal industry. What's the future of coal as an energy source in the U.S.?
Lauren Azar:
Just based solely on economics, it is going to continue to decline. As a general rule, and again, this is very simplified, the most efficient and cheapest generators are the ones that run. So, if you have a really expensive generator, it doesn't run. And if it doesn't run, it doesn't produce revenue, which means you're going to want to retire it. Coal, right now, is not the cheapest source of fuel. Natural gas is the winner right now in some areas of the United States. In other areas, wind is the winner. And in other areas, solar is the winner. Bottom line is coal is rarely the winner with regards to the cost effectiveness of the generator.
Consequently, unless coal is subsidized, which President Trump has been trying to do, or unless the technologies of coal generation improve, which also President Trump is trying to do, coal will continue to be retired.
Don MacPherson:
What timeframe would coal be completely phased out?
Lauren Azar:
I don't think coal's going to be gone by 2050, but I think it will be significantly diminished. In fact, just last week, Xcel Energy, which is a very large utility, announced that it was going to be 100% carbon-free by 2050.
Don MacPherson:
Wind and solar are becoming bigger contributors to overall U.S. energy. How do you see these trending over the next 20 to 30 years? Maybe we could start with, what percentage of the energy does it contribute right now and how is it going to grow?
Lauren Azar:
In 2017, solar was about 1% of the generation in the United States. And wind was about 6%. Hydroelectric was 7%. Now, hydroelectric, we have a lot of dams already built. There are expectations that maybe a few more are going to be built. But because of environmental regulations, we're not anticipating expanding that too much. Wind is, by far, it is cost comparable with natural gas in many parts of the United States right now. And as a consequence, a lot of it's being built. I think wind is going to continue to be built.
Let me just emphasize that this is geographically specific. For instance, in the Midwest, wind is the most cost-effective renewable source. In Hawaii, in California, in Arizona, it's solar. And so, you want to look at what the, essentially, the quality of the renewable fuel is to determine what's going to be built there. Wind is going to be huge. Solar's going to be huge. Those technologies are becoming more and more efficient because there's lots of R&D going into it. And I suspect there may be other renewables like biomass or geothermal that may become even more prominent as well.
Don MacPherson:
Battery storage is predicted to continue to drop in cost. How will cheap batteries impact the way energy is provided to our homes?
Lauren Azar:
We have built an infrastructure to deliver electricity just in time, within seconds. The amount of steel on the ground to accomplish that is mind-blowing. If you see the transmission grid, if you see generating stations, they are huge. If you see the trains that are, or the pipelines that are transporting the fuel, it's an immense amount of infrastructure. Once energy storage becomes cost comparable, or cost effective, we no longer need to have that just-in-time infrastructure. That is going to fundamentally change this industry. It's going to fundamentally change our nation. That's going to take a long time, mind you, but it will be quite dramatic.
Don MacPherson:
What do you think that timeframe is?
Lauren Azar:
I would say 40 years, 50 years. But as far as installing storage now, that's happening. California requires the installation of storage. Many people, in fact, many solar photovoltaic installers are now installing solar panels on people's roofs with storage in their basement. So, storage is already here, but it's expensive.
Don MacPherson:
And it's going to continually drop, though. Are there other methods of storage?
Lauren Azar:
There are. There's compressed air, where literally, you take electricity, you push air into old salt caverns in the ground, and then you slowly allow that air to come up, and it generates electricity. Of course, pumped hydroelectric is another kind of storage where you pump water up a hill, and then you let it come down through the hydroelectric dam. So, there's lots of different kinds of storage.
Don MacPherson:
When we were talking offline, one of the interesting things that you said is, just because you have battery storage and you might have solar panels, doesn't necessarily mean that you're off the grid. Is that true?
Lauren Azar:
The folks that were hit by Hurricane Sandy were a little surprised whenever they had solar panels and thought they were going to be okay, and it turns out their solar panels did not deliver electricity. The way panels are currently connected to the grid has them automatically shut off when the grid goes down. So, you very specifically, if you have storage and PV, you can ask your utility to allow you to, what's called island from the grid, but very few utilities do that.
Don MacPherson:
What other new technologies will disrupt the industry and change the way we live and work?
Lauren Azar:
So, storage, by far, is number one. I would also talk about microgrids. Again, this comes back to energy security. A microgrid is a geographic area where you've got generation and you also have storage. So, it can island from the grid for, hopefully long periods of time. We're seeing some of the states in the Northeast, for instance, install microgrids in their communities, just so when the lights go out that their citizens do have a place to go. The cost of renewables is going to continue to decline because the technologies are gonna continue to improve. Just as an example, in Wisconsin, we have good resources in a very small number of areas, which have already been developed for wind generation.
But as the technology of wind has improved, we are now able to install wind generators in areas that they would never install them before, because it is now cost effective to install them in these areas with more marginal winds. I think that's going to happen in more places in the United States, not just with wind, but also with solar. Big data is another area where I do think we've already seen a lot of implications of big data. And the Nest thermostats are a perfect example, where they are collecting a lot of information from a lot of different customers. And they are either feeding that to the utility, to allow the utility to do some predictions, or they actually can control what is going on in your house with regards to your electricity consumption.
If a big data aggregator is seeing a lot of increase in electricity usage, if they have the direct controls, they are able to, for instance, turn your air conditioner, make it a little warmer, two degrees warmer or something, to reduce that electricity load.
Don MacPherson:
How will artificial intelligence play a disruptive role in the energy sector?
Lauren Azar:
I think it's going to be coupled with the big data. Because ultimately, the more information we can get from the larger number of customers, that the more we're going to be able to control peak loads. The reason that's important is because, as we talked about earlier, when you're building generation, you always have to build for the highest electricity use, and then you build for even more. But when you're building generators for the peaks, that's hardly ever used, those generators are hardly ever used, so they're very, very expensive. To the extent you can reduce that peak, you are saving a lot of money for the customers.
Big data is able to essentially, come up with changes in customer behavior over a very, very large group. So, everybody just has to change their behavior just a little bit in order to accomplish the peak shaving that I was just talking about.
Don MacPherson:
When you think about the internet of things and how it applies in the energy industry and among the electricity grid, or electric grid, how do you see that being disruptive or transformative?
Lauren Azar:
It's exhilarating. There are a number of appliances in your home right now that if an aggregator or utility could control them, we would be able to reduce the peak loads. We'd be able to reduce electricity costs pretty dramatically. As an example, most appliances right now have a place where a computer chip could go, that would allow interactive communication between either an aggregator or a utility. To say, once again, with regards to your refrigerator, if it was going to be cost-effective, everybody's refrigerator would become just a little bit warmer for 10 minutes out of the hour. That could have a huge impact if there were 50,000 refrigerators that that happened with.
So, the internet of things, to the extent there's going to be interactive communication and interactive controls with those appliances that use a lot of electricity, it's going to help us quite a lot. It's very exciting.
Don MacPherson:
When you think about renewables, and obviously it's offsetting some other energy source, but the economic impact of renewables, is that a net positive for the United States or a net negative? Meaning, are we going to lose jobs because of renewables or is this advancing our economy?
Lauren Azar:
I think it's advancing our economy. And if you think about this, I sort of want to go back to a streetcar example. When streetcars were really popular, there were a lot of jobs around streetcars. Then cars came around and buses came around. Did the streetcar jobs go away? Yes. Did the automobile jobs increase and bus jobs increase? Absolutely. That's the kind of transformation we're going to see in the electric industry with regards to generation.
Don MacPherson:
It seems to me that these jobs are typically really good jobs, really high-paying jobs, more engineering type jobs, is that-
Lauren Azar:
There's a variety of jobs. In fact, we're hoping a lot of technical colleges, for instance, are going to be teaching people how to install solar on folks’ rooftops. So, there's going to be a variety of levels of skill that are going to be required to implement a renewable energy future.
Don MacPherson:
I've had a blast researching this conversation.
Lauren Azar:
Good.
Don MacPherson:
I've learned a lot and realized that there's a lot more to learn. What is a solar road?
Lauren Azar:
Solar, actually, can be installed in a lot of things, including on roadways. I believe France was the first to install a solar road back in 2016. The solar crystals are essentially embedded in the road. So, the road is producing electricity while it's just sitting there. The latest analysis of solar roads are that it may not be cost-effective to install these solar in all of our roads. There are solar roof tiles right now, which is another area where I personally hope it does take off, right? Rather than install…
Don MacPherson:
Roof tiles on top of vehicles or…
Lauren Azar:
No, roof tiles on top of your house.
Don MacPherson:
Oh, so replacing like shingles. Interesting.
Lauren Azar:
Every single shingle on your house is actually a mini solar panel.
Don MacPherson:
That's very attractive.
Lauren Azar:
It is very attractive. Yeah. They're not cost-effective yet, but that's another area where I hope that R&D is going to help bring the cost down.
Don MacPherson:This idea of just-in-time delivery is fascinating. And so, maybe you could explain that a little bit more because you can't always predict when there's going to be a massive draw on the grid, right?
Lauren Azar:
Correct. And let me just give you an analogy with regards to the just-in-time. The high-level grid has to keep a frequency at a certain amount. The frequency can't get too much, i.e., there can't be too much generation put on it, or the frequency can drop, in other words, too many toasters come on. And it's like a swimming pool where there are hoses going into the swimming pool and there are drains coming out of the swimming pool. And you need to keep the swimming pool within about an inch. As a whole mess of drains open up, a whole mess of hoses that are filling up the swimming pool have to turn on.
And there are a variety of different ways we do, do that, including generators that sort of are spinning, but not putting electricity on the grid. And so, when a lot of toasters come on, they're able to very quickly put more generation on the grid. Another example that we talked about is that if you're aggregating electricity over a number of customers and you're able to control their electricity use, you would then be able to respond pretty quickly to changes in electrical use over a confined geographic area.
Don MacPherson:
This has been fascinating. Lauren, thank you for being a genius.
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