TRENDS RESHAPING RETAIL ELECTRIC SERVICE PNUCC BOARD MEETING MARCH 9, 2018
Threat or Opportunity?
Threat or Opportunity? New Technologies Want Your Customers Want Control but Not Responsibility
Who Owns the Narrative? If you want a good example how bad government can kill good jobs and clean energy innovation, take a look at what’s happening in Nevada, where a Forbes decision by Governor Brian Sandoval’s appointees, pushed by NV Energy Inc., essentially killed the thriving local solar energy industry . FEB 11, 2016 . . . Public Utilities Commission approved a new net @ 01:36 PM metering rule for people with rooftop solar systems that significantly increases monthly fees they pay their utility and significantly decreases the value of unused energy they sell back to the grid. . . . it will simply take too long to recoup a solar investment so that, for most, solar will no longer be a smart financial move. Solar companies are already running for the border. And if killing jobs wasn’t enough, . . . In some cases, people who have invested tens of thousands of dollars are immediately underwater ; it may take them decades to see a financial return on their investment. . . .
“Emerging” Technologies Now “Mature” Decreasing costs and new business models compete with the traditional utility model: • Private generation for residential and commercial customers • Storage revolution • Transportation electrification • Third party home energy management solutions Vendors aggregate to compete with supply and/or be compensated at the retail level for grid services.
No Business As Usual • Commercial customers are leaving the system to purchase their own supply. • Technology companies expect transparency in supply and grid planning. • Utilities must duplicate distributed renewables capacity unless and until it is “ controllable ” . • Current rate structures to incentivize distributed energy resources have distorted the true economic value and benefits brought to the grid by increased distributed resources. • “ As a result, some customers are making inefficient investments and are overcompensated for the services that they provide to the power system. At the same time, many more opportunities that could deliver greater value are being left untapped because of inadequate compensation. ” – 2016 MIT Energy Initiative, The Utility of the Future
Threat or Opportunity?
GR$$N vs. CLEAN September 2016 “MGM is now contracting with [an] independent energy company . . . for the 171 megawatts consumed by its Nevada properties. The motivations for the departure were energy independence and the desire for more renewable energy, said Cindy Ortega, senior vice president and chief sustainability officer at MGM, . . ‘We’re required to do 23 percent; we’re going to try to double that,’ Ortega said. ‘It’s going to increase, no question about it. ’” Source: GreenTech Media, How MGM Prepared Itself to Leave Nevada’s Biggest Utility June 2017 “Nevada’s powerful casino lobby group was a strong opponent of AB 206 [increasing Nevada’s RPS to 40% by 2030], because it would have required large gaming companies, which recently paid tens of millions of dollars in exit fees to purchase power on the open market, to also meet the higher renewable energy targets. In April, Virginia Valentine, president of the Nevada Resort Association, . . . said, ‘We are concerned that this bill may be too much and too soon.’” Source: GreenTech Media, Nevada Governor Kills Renewable Energy, Community Solar Bills with Deregulation Pending
Renewable Portfolio Standards (RPS) with Solar or Distributed Generation Provisions www.dsireusa.org / March 2015 WA: 2 MW NH: 0.3% (E) x 2014 DG (M) MA : 400 MW PV x 2020 MN : 1.5% (E) x 2020 NY: 0.58% customer - OR: 20 MW PV 0.15% PV sited x 2015 x 2020 DG x 2020 2 for PV (M) MI: 3.2 PA: 0.5% PV x 2021 + (M) NJ: 4.1% (E) x 2028 for (E) NV : 1.5% (E) DC: 2.5% (E) x 2023 IL: 1.5% x 2025 2.4 + OH : 0.5% PV x 2026 DE: 3.5% PV x 2026 for PV (M) (E) x UT : 2.4 (M) 0.25% DG CO : 3.0% DG 3.0 (M) for PV 2027 MO : x 2026 for (E) x 2020 0.3% (E) MD: 2% (E) x 2020 1.5% CST x x 2021 2020 (M) NC: 0.2% (E) x 2018 DC AZ: 4.5% NM: 4% (E) DG x 2025 SC : 0.25% x 2020 DG x 2021 0.6% DG x 2020 Renewable Portfolio Standard with solar/distributed (E): Solar Electric Delaware allows certain fuel cell systems 21 States + DC generation (DG) provision PV: Solar Photovoltaic to qualify for the PV carve-out have an RPS with DG: Distributed Generation Solar water heating counts toward solar or DG Renewable Portfolio Goal with solar/DG provision (M) : Multipliers (CST): Customer - Sited solar/DG provision provisions
Lazard’s Levelized Cost of Energy 2017 Source: https://www.lazard.com/perspective/levelized-cost-of-energy-2017 /
100% Renewables ASAP (Please) • Distributed generation installation on the rise • Utility scale renewables cost-competitive with natural gas • “Putting the pieces together, the net cost of energy storage reflects (a) the increase in cost from building the storage, less (b) the fuel, fixed, and variable costs of thermal generation that storage replaces. Whether this outcome is a net cost or a net savings depends on the specific characteristics of the grid in question, and its renewable energy profile.” - Michael Cembalest, J.P. Morgan Annual Energy Paper, June 2017 • New renewable plants put immediate upward pressure on rates: (1) rates do not reflect the cost of carbon emissions (which renewables save); (2) rates must reflect the cost of keeping the thermal units to provide power when renewables power down • Renewables subsidies (ITC/PTC) will not be available forever • Natural gas cannot compete with renewables in energy market
Customer Perception Bring Back Solar @bringbacksolar 15 Jun 2017 Thank you to our amazing volunteers for your tireless work over the past 18 months. Together we #broughtbacksolar!
Customer Expectations vs. Customer Behavior Customers are Asking Customers Want • • Why do new technologies impact rates? Cleaner technologies for cheaper • • Why doesn’t the utility offer these Efficient services and solutions and billing products? • • How to utilize new technologies? Control and savings without responsibility “Customers now face unprecedented choice regarding how they get their power and how they manage their electricity consumption — regardless of whether they are aware of those choices or are acting on them today.” – 2016 MIT Energy Initiative, The Utility of the Future
Customer Expectations vs. Customer Behavior • “With the home energy management market expected to reach $1.9 billion by 2019, the opportunity is ripe for utilities to integrate energy efficiency and demand response programs into their portfolios .” • “According to a recent survey by Parago, only 14 percent of U.S. consumers engage in demand response programs today, but 87 percent would do so with the right incentives .” • “The challenge utilities face is changing the nature of their relationship with residential customers to drive successful adoption of energy efficiency programs on a larger scale .” • “What customers understand are intangibles — safety, comfort, control, convenience. Utilities must address these customer needs .” Source: Greenbiz, What utility customers really want in home energy management (Dec. 2, 2014)
Threat or Opportunity? • Customer education • Rate structures with visibility • Demand charges • Aggregation of DER by the utility • Energy management • Energy market • Data and security • R&D
Questions?
Lauren Rosenblatt Marie Steele Lauren@e-centricity.com Marie@e-centricity.com
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