Cost effective renewable resources, energy storage, demand response, grid sensors/equipment, software, data availability and electric vehicles.
The ”traditional” electric industry that remained largely unchanged for many decades, is undergoing transformative change more rapidly than any other time in its 100+ year history. The transformation is impacting every aspect of the utility business, and expertise is needed to help insure success. This industry transformation is largely driven by:
Thru legislation/regulation such as renewable portfolio standards, greenhouse gas mandates, transportation electrification, energy storage, NEM rate mandates, as well as efforts to shut down coal units and likely gas units, Emission Performance Standards, Clean Power Plan, Clean Air Act.
Convenience and data offered by smart devices/applications to monitor/control energy use (e.g., generation, thermostats, sprinklers, vehicles, bill payment, and technological advances in other industries such as cell phones and cable.
Significant areas of impact include (not in priority order):
California again led the nation when it enacted two landmark pieces of legislation in 2006 (AB32 – Global Warming Solutions Act and SB1368 Emissions Performance Standard), launching the process to again change the electric utility industry.
Given all the changes in multiple forums (CAISO, CEC, CPUC, CARB, NERC, WECC, SCAQMD, etc.,) it is critical to remain fully engaged in the market. The new market paradigms will require new rules/regulations both financially and operationally.
Currently enacted California legislation requires reducing greenhouse gases. Advanced technology enables a high-level adoption of more cost effective intermittent renewable resources and battery storage, and might jeopardize reliable operations of the high-voltage grid to balance supply and demand.
These intermittent resources can impact the operations of generation resources in terms of ramping up and turn downs, starts and stops, run hours and emissions credits.
The impacts from disruptive technologies on the high-voltage grid (e.g., the “duck curve” or the “net” load shape (load-less-renewables) that is impacting reliability, creating periods of over generation and negative pricing, and the need for steep ramp ups and downs every day), will also manifest at the local distribution level with more distributed energy resources, thus bringing similar issues closer to home.
These technological advances require grid infrastructure investment for upgrades and replacements to manage a more integrated, resilient, adaptable, sustainable and bi-directional grid. The future distribution grid will be a more neutral, open-access platform similar to the internet – and will facilitate customer choice on the services they select. These investments are required without a clear understanding of future business models, local adoption rates of distributed energy resources, micro-grids, storage, etc., that impact the future use of utility infrastructure.
Customers’ expectations are also transforming as retail consumers become prosumers. Customers are becoming not only consumers, but also producers of generation as excess generation is fed back onto the distribution grid that was not designed for this two way power flow. This impacts traditional resource planning activities as the amount of distributed resources (including generation, storage, electric vehicles, etc.,), energy efficiency, and customer driven demand response will mitigate the amount of resources that utilities previously had sole planning responsibility. Vertically integrated utilities must develop the framework to facilitate customer needs—and provide services desired (e.g., customer sited distributed energy resources, use of wires only, maintain customer facilities, backup service, provide solar services, rate options, develop apps to access customer data, convenient bill payments, etc., as appropriate). This presents an opportunity for a utility or private entity to install infrastructure with dual purposes—to provide customer service in a customer-centric business model, upgrade infrastructure to access better and timely data, grid sensors and self-healing technology that improves grid reliability and decision making.
Historical rates and rate structures that have served for decades are no longer appropriate. New rate structures are controversial but necessary to preserve financial integrity– to more equitably recover costs from customers that benefit from specific services, will include charges for use of infrastructure, restructuring time of use and other rate offerings, unbundling rates, pass-through rate mechanisms, and providing more service and rate options that customers now expect—similar to diverse plans offered for cell phones, data or cable tv. Rate structures should be strategically developed that are cost-based, fair, equitable, and indifferent to whether a customer self-provides or takes service from their present host, to insure remaining customers are not subsidizing grid-emigrants.
Business as usual will not be a successful future business model. Flexibility, sustainability and adaptation are critical for future planning activities. Planning activities will require more data analytics, with ongoing monitoring of customer adoption rates of distributed energy resources, energy efficiency, demand response, energy storage, electric vehicles, and other yet-to-be-developed technologies, while determining the appropriate resource mix that meets all regulatory mandates and future customer energy needs. Due to the potentially disruptive financial impact from these heightened and mandated activities, closer collaboration with rates and customer relations is required.
With the availability of more data, increased reporting and audits required by state agencies is anticipated. SB350 mandates a comprehensive Integrated Resource Plan. Also new—is SB350’s requirement that this be submitted to the CEC for review. It’s conceivable that an integrated distribution resource plan may be mandated in the future.
The advanced technology revolution has also resulted in a tremendous amount of data—both customer and infrastructure related, that will need to be systematically analyzed, processed and used to make informed decisions.