The Future of Energy Delivery: The Ongoing Grid Transformation NALEO National Policy Institute on Energy 26 February, 2016 Hotel Maya, Long Beach, CA Lola Infante Director Generation Fuels and Market Analysis
Overview Ongoing Innovation Evolving technologies and markets Evolving policy and regulation 2
A Century of Innovation September 1882: Edison used a steam engine to drive his dynamo to generate direct current electric power for a central power generating station on Pearl Street in New York City. It had 85 customers and 400 lamps. January 2013: GE unveiled a new wind turbine design, billed as the world s most efficient high output brilliant wind turbine. The turbine features an integrated energy storage system. It comes with a datadriven system designed to boost efficiency and improve power output and is the first to use the Industrial Internet to help manage the variability of wind providing smooth predictable power. 3
Industry Vision Value- Focused Modern, Reliable, Resilient Grid Customer- Driven Clean Energy Innovative Solutions 4
The Electric Distribution System in Transition Source: The Edison Foundation Institute for Electric Innovation, Thought Leaders Speak Out: Key Trends Driving Change in the Electric Power Industry, December 2015 5
The Electric Distribution System in Transition Source for graphics: EPRI, The Integrated Grid: Realizing the Full Value of Central and Distributed Energy Resources, February 2014 6
The Use of Renewable Energy Is Growing Nationwide Source: Velocity Suite, ABB Enterprise Software; GTM/SEIA Solar Market Insight Solar includes PV and CS 7
Solar Power is Expanding Solar Energy is Growing Everywhere Large-Scale Utility Solar Projects Amount to About 60 Percent of All Installed Solar Capacity Source: Velocity Suite, ABB Enterprise Software; GTM/SEIA Solar Market Insight e = Estimated. Solar includes PV and CSP 8
Utilities Lead the Way On Solar Power 9
Large-Scale Utility Solar PV is About Half The Cost of Residential Rooftop Solar Source: GTM/SEIA Solar Market Insight Data is the average Q1-Q4 2014. Data only includes cost of PV technologies 10
Solar Compared 11
New Rate Design, Compensation and Incentive Mechanisms Rooftop Solar Power Is the Most Expensive Resource Rooftop Solar Provides the Same Benefits Than Central Station Solar Current Rate Designs Work Poorly for Distributed Generation Under NEM, Distributed Generators Do Not Pay Their Full Share of Grid Costs 12
New Rate Designs are Being Proposed Three-Part Rate Volumetric Charge Variable. Based on consumer s monthly electricity consumption (e.g. fuel costs ) Fixed Charge Fixed. Based on fixed costs incurred by utility (e.g. like metering, poles) Demand Charge Fixed but can vary over time. Based on a customer s maximum kw demand over a billing cycle (e.g. transmission and generation capacity) Why Residential Demand Charges? Protect small and low income customers Demand charge is a function of customer s size and maximum consumption Incentivize energy efficiency (smarter load management) Customers can reduce their bill by reducing their maximum demand Better align prices and costs Customers pay for their share of the costs they impose on the system Reduce or eliminate cross subsidies Customers with lower maximum consumption do not subsidize those with higher maximum consumption Improve utility cost recovery Reduces risk of under-recovery when overall consumption goes down Follow established regulatory precedent C&I customers have a long history with demand charges. Smart meters make them possible for residential sector. Consumer friendly Easier to implement than dynamic pricing Based on Ryan Hledik, Rediscovering Residential Demand Charges, The Electricity Journal, Vol. 27, Issue 7, Aug/Sept 2014 13
Community Solar Community solar is a voluntary, solar ownership alternative for groups of participants accessible to all. Programs are active in 25 States State Shading: Community Solar Legislation Enacted Symbols: Utility-Administered Third-party Administered + Source: SEPA 14
Energy Storage: Large Potential 15 Source: GTM Research/ESA U.S. Energy Storage Monitor, Q3 2015, December 2015
Energy Storage Definition Technology capable of storing previously generated electric energy and releasing that energy at a later time. Electricity storage can occur as potential, kinetic, chemical, or thermal energy. The release of the energy can be in forms that include electricity, gas, thermal energy and other energy carriers. Asset Categories Electric generation asset Transmission asset Distribution asset DSM asset Capacity Flexibility Uses Reliability/resiliency Microgrids and community projects Technologies Solid state batteries: Electrochemical storage solutions, including advanced chemistry batteries and capacitators Flow batteries: Energy is stored directly in the electrolyte solution for longer life cycle and quick response times Flywheels: Mechanical devices that harness rotational energy to deliver instantaneous electricity Compressed air energy storage: Compressed air is used to create a potent energy reserve Thermal: Heat and cold are captured to create energy on demand Pumped hydro power: Large scale reservoirs of energy are created with water 16
Why Energy Storage, Why Now? Integration of variable renewable resources Deployment of distributed energy resources Grid modernization The grid needs flexibility and reliability Technology advances Policy changes Cost declines Resiliency improvements The technology is maturing rapidly 17
Microgrids are Multiplying and Utility Partnerships are Emerging Proposed microgrids Islands / Remote Locations 18% Commercial / Industrial 20% Utilities 10% Military Installations 15% Universities / Research Facilities / Hospitals 25% Cities/ Community/ Public Institutions 12% Source Data: Navigant Research 18 Picture: Northwestern grid supported micro grid
State Initiatives on the Evolving Utility 'Utility of the Future' Projects DER deployment models and compensation Utility business models Distributed resource plans Grid modernization plans Consumer choice options Source: GTM Research 19
Partnering with technology companies Investing in grid transformation Connecting with customers Providing safe, reliable, affordable and clean electricity for all customers
Industry Goal Strike a Balance Among Reliability, Sustainability, and Affordability Attain Customers Desired Level of Electric Reliability...... And Society s Clean Energy Policy Goals...... At as Low a Cost to Electricity Customers as Possible. Reliability Sustainability Affordability 21
QUESTIONS! Lola Infante linfante@eei.org (202) 508 5133
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