Category Archives: Smart Grid

LA Better Building Challenge Partners with EDF’s Investor Confidence Project to Accelerate Citywide Energy Efficiency Goals

By Matt Golden, Senior Energy Finance Consultant

Source: LA Better Buildings Challenge

Environmental Defense Fund’s Investor Confidence ProjectSM (ICP) is pleased to announce a partnership with the Los Angeles Better Buildings Challenge to help develop a more robust marketplace for energy efficiency retrofits in the city. Los Angeles has set a goal of achieving 20% energy savings across 30 million square feet of existing buildings by 2020 as part of the Better Buildings Challenge, a national leadership initiative sponsored by the U.S. Department of Energy. If achieved, it is estimated that this 20% reduction in energy costs will create over 7,000 high-quality local jobs, and avert annual carbon emissions equivalent to taking more than 18,000 cars off the road.

The LA Better Buildings Challenge will be promoting the ICP Protocols through its network of building owners and industry stakeholders to help bring even greater transparency and accountability to the energy efficiency market by introducing a system of standardization in the way commercial building retrofits are developed, funded, and managed. The ICP framework assembles best practices and existing technical standards into a set of protocols that define a clear roadmap for developing projects, determining savings estimates, and documenting and verifying results.

David Hodgins, Executive Director of the LA Better Buildings Challenge, describes how the partnership with ICP will help the project meet its goal. The mission of the LA Better Buildings Challenge is to support our partners in achieving a minimum of 20% savings by 2020, and to get there we need to have a clear path. We are excited to partner with ICP, which offers our partners a best-practice approach to developing, underwriting, and measuring the impact of their resource efficiency projects,” he said. Read More »

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CPUC Singing the Right Tune on SONGS, But Southern California Still Needs to Harmonize to Achieve a Clean Energy Future

rp_Navarro_Lauren.jpgLast week, the California Public Utility Commission (CPUC) finalized an important decision for Southern California’s energy supply following the closure of the San Onofre Nuclear Generating Station (SONGS). The plan emphasizes increased reliance on clean energy in this part of the state – an important step towards a fully realized low-carbon future.

The decision authorized San Diego Gas and Electric and Southern California Edison to procure at least 550 megawatts (MW) of ‘preferred resources,’ which include renewable energy, demand response (a tool that’s used by utilities to reward people who use less electricity during times of “critical,” peak electricity demand), energy efficiency, at least 50 MW of energy storage, and up to 1,000 MW of these resources altogether.

That’s a major step forward, as utilities across the country traditionally rely on large fossil fuel plants to meet regional demand.

However, the CPUC also authorized the procurement of 1,000 MW of power from natural gas generation, demonstrating that Southern California still has a ways to go to reach its clean energy potential.

Read More »

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California on Course to Give Power to the People

Jamie Fine PhotoIn a report issued by the Energy Division at the California Public Utilities Commission (CPUC), experts demonstrated their commitment to the transition toward greener electricity rates in the Golden State. This is good news for two reasons: It will give customers more control of their utility bills and it keeps the state on course to cut pollution.

Today, most Californians are frozen by energy bills that are hard to understand and even more difficult to keep under control.  Fortunately, recommendations from the CPUC released Monday will put the power in the hands of customers by transitioning to rates that vary with the time of energy use.

These “time-variant rates” (TVR) can cut pollution by giving customers tools to directly influence how much money is spent on the least-efficient, most-expensive, and most-polluting power plants.   Critically, it’s also a way to avoid ever-growing, system-wide peak demand that leads to the building of additional power plants, known as “peaker plants” as they are specifically designed to serve customers at times of peak demand.

Because peak power plants run so few hours a day and are so inefficient, EDF estimates that if half of consumers participate in time-variant rates, California would save nearly $500 million annually.

The savings – from avoiding costly enhancements to grid infrastructure – will mean lower bills for customers and cleaner air for all.  The CPUC report affirms EDF’s analysis that total system costs will be reduced with wide-spread participation in time-variant rates, estimating that peak demand – and the associated costs of peaker plants – would be reduced by 12%.

As required by law, the rate reform proposal sets expectations that adequate protections be put in place for vulnerable customers.  The law also requires that people will always be able to choose their rate structure, but most will find that participating in time-variant rates will lower their bills with little or no effort to change their daily patterns.

The next step is for the CPUC and utilities to implement these recommendations and to put customers on the path to more cost- and environmentally-friendly rates.  With robust plans for education, outreach and enabling technologies (like programmable thermostats) to help customers reap the benefits of greener electricity prices,  time-variant rates can become another shining example of California’s commitment to innovation, the environment, and its people.

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At a Key Moment for Energy, California Should Seize Demand Response

Traditionally, if an area’s population grows — or it loses a power plant — it needs more energy. But California and some other states can approach it differently and reduce the use of fossil fuels.

Instead of asking, How can we add more energy?” the real question becomes “How can we reduce demand?”

Two words: Demand Response (DR).

DR is an incentive that has been proven to work on the East Coast and elsewhere, encouraging energy users who voluntarily participate to reduce their electricity usage temporarily when demand could outpace supply.

Recently, the California Energy Commission’s Integrated Energy Policy Report (IEPR) Draft recognized DR as a technology with a high potential to maximize energy efficiency. This report comes at an important time for the state, when greenhouse gas emissions from large facilities have increased in California after decreasing the previous years, in large part due to the closing of the San Onofre Nuclear Generating Station (SONGS) power plant.

In our recently submitted comments, EDF commended the Commission on thinking big on demand response, a cutting edge load management technology that can lower wholesale energy prices when they are highest, dramatically minimize system costs, and reduce air pollution and greenhouse gas emissions.

In their report the Commission also acknowledged that while DR is a great tool if used well, there still “has been little progress towards increasing the amount of DR used in the state.”  The Commission included several recommendations to bolster DR going forward, which EDF supports and will advocate for.

We also made suggestions for how the Commission could maximize the use of DR in California, including:

Time of Use (TOU) tariffs allow customers to pay prices for energy that depend on both when and how much they use. By giving customers the option to save money for reducing their energy use at peak times, older, less efficient peaker plants aren’t used as much and the overall system costs go down dramatically. If half of Southern California Edison’s ratepayers adopted its voluntary TOU program, this would replace the need for two thirds of the San Onofre generating capacity.

  • Set clear and ambitious goals for demand response in the state

The Commission should set ambitious benchmarks in regard to demand response capacity.

  • Foster consumer adoption of innovative demand response technology

Modern technology allows for automated thermostats, ‘set it and forget it’, and other options for easy to use systems that allow interested electricity customers to quickly and consistently respond and reduce energy use when demand is high and the grid is stressed. The Commission should plan to increase consumer uptake of these technologies.

  • Support new technologies and quick scaling up of pilot projects

Demand response opportunities exist on a broad scale in California.  Innovative ideas like charging electric cars when solar power is abundant to help maximize the benefits from renewables are still being developed. The Commission should encourage and support these new technologies, and look for successful pilots that are both cost-effective and fully scalable.

  • Establish effective enforcement mechanisms

By putting in place proper monitoring and enforcement mechanisms, the Commission will help ensure expected environmental benefits.

 The Commission’s IEPR is a great step forward, and comes at a key moment for managing California’s energy system. We urge the Commission to continue its work with other stakeholders to increase this momentum, and to utilize its authority – such as appliance and buildings standards and electricity forecasting – to help implement the state’s vision for demand response.

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Setting the PACE on Clean Energy Finance

I spend most of my time working to establish On-Bill Repayment programs that allow property owners to use their utility bill to repay loans for cost-saving energy efficiency or renewable energy upgrades.  Many of my colleagues work on a similar program known as Property Assessed Clean Energy (“PACE”), which uses the property tax bill for repayment.  Since both utility and property tax bills are usually paid, both PACE and OBR are expected to lower the cost and increase the availability of financing for clean energy projects.

Last week, I was invited to attend a meeting of the leading PACE program administrators, property owners and other market participants in the country — and was pleasantly surprised to learn how much progress is being made.

Connecticut launched their program in January and is expected to close $20 million of PACE transactions for commercial properties by year end.  The Toledo, Ohio area expects to have executed $18 million of commercial transactions by the end of 2013.  Sonoma County, with a population of less than 500,000, has already completed $64 million of financings for residential and commercial properties.  In late 2012, CaliforniaFIRST launched a PACE program for commercial properties that has already received 130 applications.

We also heard from the head of Keep PACE in Texas who recently sponsored legislation to enable PACE in the state.  PACE, like OBR, uses private funding to allow property owners to voluntarily retrofit their properties.  This makes the program popular with many conservatives and the legislation was able to pass with a unanimous vote from the Texas House of Representatives in May.

Historically, most of the PACE transactions have gone toward financing energy efficiency improvements.  As I wrote in May, Connecticut has set up their PACE program to include financing solar projects as well – using financing structures (leases and power purchase agreements) that tend to provide the lowest-cost solutions for building owners.  Last week, I learned that CaliforniaFIRST and other California-based PACE programs may now be able to offer the same solution for commercial property owners across the state.  This could dramatically increase the availability of financing for solar projects in commercial properties.

Most solar deals are financed over 20 years.  For properties with good credit, this works well as solar photovoltaic (PV) panels have a long lifespan and solar generation can be predicted accurately.  Most government buildings tend to have good credit and can usually finance solar with no money down.  Unfortunately, unless a commercial property is owned or leased by a highly-rated company, the property does not normally qualify for financing.

PACE programs can put an obligation onto the property tax bill that survives all changes in ownership and allows most properties to qualify for credit.  I am hopeful that PACE will be a game changer for solar installations for commercial properties in California. Ultimately, these improvements will save property owners money by reducing their energy consumption, put Californians to work and lower harmful pollution in the process.

Also posted in Clean Energy, Energy Efficiency, On-Bill Repayment | 2 Responses, comments now closed

Keeping it Clean: California Should Use Clean Resources to Integrate Renewables

As the 8th largest economy in the world, California remains a global leader in clean tech investment, innovation and adoption of landmark climate and energy policies. What defines our success?  Our ability to try things first, set the bar high, and get policies right.

California’s Renewable Portfolio Standard (RPS) is a perfect example of that bold, pioneering spirit. Passed in 2011, the RPS required that 33% of electricity come from renewables by 2020 – a lofty benchmark, even by California’s standards. Along with self-generation and solar rooftop programs, California is successfully adding solar, wind, and other distributed generation to its resource portfolio.

In fact, renewables are successfully becoming a large part of daytime energy production, the California Independent Systems Operator (CAISO) – the organization in charge of balancing the statewide grid – is concerned over how to make up for that energy when the sun goes down while evening energy demand spikes.  The question is: How can the CAISO reliably integrate renewables?

The CAISO is currently figuring out how to address this need for “flexible” power and will have a draft decision out on October 2nd.  Just like people prefer to take routes they know well when they drive, the CAISO is most comfortable with what they know: familiar fossil fuels. Using clean resources and demand response instead is new territory for them that will require careful orienteering.

Yet getting comfortable with the new, cleaner terrain means a less polluting, less expensive, more resilient energy future.  California passed the RPS to reduce fossil fuel consumption — and the pollution that comes with it.  If fossil fuels become the main method by which renewables are integrated, they could eliminate the emissions benefits of renewables entirely, while consumers may pay more than necessary to integrate renewable energy.

There are clean options that have been proven to work in grid operations, such as demand response – the voluntary reduction of electricity use by customers who are paid to do so when called upon.  By reducing demand at key times, demand response lowers the need for electricity production and saves money in the process. (This is an area where California can learn from East Coast states that are robustly using demand response in their electricity markets.)

EDF has actively engaged CAISO on the need for “flexible” power, and knows they are working hard to figure out how to use demand response and other clean options to integrate renewables. We have also asked CAISO to utilize existing, clean resources and to revisit this framework every few years to make sure it is as clean as it can be – all to make sure that California has time to get it right.

Leading the way isn’t always easy, but if successful, California and CAISO will show they can utilize proven resources like demand response to keep California’s energy policies clean and cost-effective, while readying the grid for high levels of renewable resources.

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How's Your Electric Bill Treating You? Time To Give It Some Thought

When was the last time you really gave a lot of thought to your electric bill?

If your answer is “not very often”, then you’re not alone. In fact, the typical household thinks about their electric bill only six minutes a year.

The California Public Utilities Commission (CPUC) now has the opportunity give people another way to control household energy bills by creating a system where changing the time you use electricity can save money. This won’t mean you’ll need to invest more time thinking about energy use, but you’d be well-served to think about the timing of it.

Last week, the CPUC held a public workshop inviting stakeholders — PG&E, SCE and, SDG&E, along with consumer, industry, and environmental groups — to present and discuss their proposals for revising the system of charges for residential electricity use. I had the pleasure of presenting EDF’s proposal for a time-of-use (TOU) pricing system: For customers looking for another option for saving money on their monthly bill, EDF sees TOU as the best pricing policy for both people and the environment; customers uncomfortable with this option would be able to “opt out” and choose another pricing structure.

Currently, the standard “tiered” rate charges customers higher prices for higher electricity usage. The approach is intended to send the message: “The more you use, the more you pay.”

Yet, current rates hide the true cost of electricity service at certain times of the day – and most customers don’t know where their usage falls until they actually see the bill at the end of the month. Ultimately, this lack of information prevents customers from making informed decisions about their energy use, limits their options for keeping bills within budget, and makes the overall energy system in California dirtier and more expensive.

As detailed in our proposal, EDF has found that updating the current pricing policy to be based on the timing of actual energy use will empower consumers to save money, dramatically lower overall system costs, facilitate more efficient usage of electricity generation assets, lower peak energy demand, provide more accurate and effective energy conservation incentives, and more equitably share energy system costs amongst customers. Here is a short list of what TOU can do for you, and California:

  • Dramatically Lower System Costs.  Using the utilities’ own data on the costs of serving electricity to customers, EDF estimates that if half of residential customers adopt the optional TOU rates available already , we’d reduce the cost of service by around $500 million each year.  If translated directly into savings for residential electricity customers, electricity rates could be reduced significantly: a roughly 15% rate decrease would be enjoyed by all customers. How can this be so?  Simply put, it is most expensive to provide customers with electricity at times when demand for electricity is highest.  If customers paid for energy based on actual costs of electricity service, they would see higher prices at peak times and thus be motivated to shift energy use to cheaper times of the day.  This shifting is better for overall system costs, and better for your wallet.
  • Avoid Adverse Environmental Impacts. TOU will: (1) reduce the need for “peaker” power plants that tend to be fossil-fueled, expensive to operate and among the most polluting resources on the system, (2) reduce the environmental impacts and costs of siting, operating and building power plants and transmission lines, and (3) help to integrate increasing quantities clean, renewable resources.
  • Attract Clean Energy Investments for Residential Consumers. TOU will spur innovation in the electricity marketplace, promoting the development of new services and technologies that enable utilities and customers to better manage electricity production and use through distributed, resilient, clean, and low-cost energy services and products. While the average customer may not think much about how and when they use electricity, service and technology companies live and breathe it. TOU rates provide new value propositions that clean energy innovators will deliver to our doors.
  • Reward you for your choices. A recent survey of nearly 5,000 customers by Pacific Gas and Electric and Southern California Edison found that 75 percent have tried shifting their energy use already – even though they receive no financial rewards to do so.

EDF’s proposal is a win-win for people and the environment, and takes us along the path to a cleaner, cheaper, and more resilient energy system. I urge the CPUC to conclude the same with a decision this Fall that will set the direction of California electricity pricing and prompt utilities to provide the robust consumer education and enablement with set-it-forget-it technologies.

While the concept may be complex, TOU will be better for you, for the environment, and the clean energy marketplace.

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Cream Cheese and Time-Of-Use Electricity Pricing

“The cream cheese just fell off the roof of the car,” my 7-year old daughter said as I turned into my driveway after a trip to the grocery store.  Right now you might be asking yourself, “What does this have to do with time-of-use pricing?” Allow me to explain.

We live in Alameda, CA, where plastic bags are prohibited and stores must charge for a paper bag. Alas, I had forgotten to bring a reusable one.  To teach my children a lesson and avoid the public scorn (not so much the $0.05 per bag), I carried our groceries and asked the kids to lend their hands. And yes, I put the cream cheese on the roof of the car to free a hand to unlock it.

Once home, I realized that, in addition to almost losing my cream cheese, I’d been making potentially risky tradeoffs.  After all, exiting the supermarket with full hands prevented me from holding my children’s hands while crossing a busy – and dangerous – parking lot.

Don’t get me wrong; I’m not lamenting the ban on plastic shopping bags.  I think it makes perfect sense, but it takes time to start making the adjustment and the risk tradeoffs aren’t always obvious.

This scenario– making adjustments that may seem inconvenient and a bit scary, but are well worth the effort– plays out in other areas of life as well.  Particularly in rethinking how Americans use and pay for electricity.

Most of us don’t think about how the time of day affects the cost of serving us power.  In California, we aim to change that by moving to Time-of-Use (TOU) pricing – which will make electricity more expensive during times of peak, or high, energy demand and cheaper off-peak.  In fact, just yesterday, the Sacramento Municipal Utility District (SMUD) recommended moving all residential customers to time-of-use rates by 2018 in an effort to give customers more control over energy costs.

EDF believes that TOU pricing will be best for people and the environment, just as banning plastic shopping bags effectively reduces their environmental impact.  This approach can encourage conservation and reduce peak energy use while providing customers with more choices that can ultimately lower their monthly bills.

Switching to TOU electricity pricing may feel to some like being thrust into a busy parking lot with an armload of groceries and two children to monitor.  When should I use my dishwasher?  Do I need to reset my air conditioner?  Well, yes and no.  You can choose to do nothing, or you can exercise a choice you don’t have with our current pricing structure: shifting energy use to times of lower electricity prices.  It’s quite doable.

A recent survey of nearly 5,000 customers by PG&E and So Cal Edison found that 75 percent have tried shifting their energy use already – even though they don’t get paid to do it.  Two-thirds of respondents said they’d be willing to risk higher bills for the chance to save energy for environmental purposes.  This willingness, combined with wise policies – such as the “Try-Before-You-Buy” bill protection that prohibits bill shocks for up to one year after a customer changes rate plans – bodes well for the union of can-do attitudes and technology innovations like digital electricity meters and automated “set-it-and-forget-it” learning thermostats.

The rewards will be significant: TOU pricing will reduce the amount of peak electricity needed from dirty fossil fuel “peaker” power plants, thereby avoiding costs from blackouts and new energy infrastructure investments.  It can also help to incorporate more renewable, clean energy resources onto the grid – like wind and solar – with significant benefits for energy independence and reduced air pollution that will put us on a pathway toward stabilizing our climate.

Most consumers will see lower energy bills from TOU electricity pricing without doing anything.  Others will need to make adjustments, particularly homes that use a lot of energy during peak energy times of the day.  With a little planning, knowledge and helpful technology, it can be as easy as keeping extra shopping bags in your car.

Just as banning plastic bags is helping to reduce environmental degradation, so too can TOU electricity pricing.  We just need to get comfortable with the idea.  That way we can have our cream cheese and clean environment, too.

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Nest Labs: Proof Life Exists in the Smart Grid Ecosystem

There are many conceptions of the smart grid; what it is and what it should do for us – the “ratepayers” – who will finance the necessary upgrades to California’s electrical system.  I find the concept of a “smart grid ecosystem” — with smart customers, smart utilities and smart markets — to be a helpful guidepost as we seek to evaluate what should be accomplished by the utilities trusted to deploy our smart grid.

Ecosystems achieve resiliency through diversity.  We want a variety of clean energy resources on the supply side – hydropower, wind, solar photovoltaic, solar thermal – spread across a variety of locations (but never too far from customers).  Similarly, on the demand – or customer – side, Californians, buildings, appliances and electric vehicles create an intricate, synergetic web that can be made more efficient and flexible with customer education and empowerment, customer-focused energy pricing policies, and demand response (which allows customers to voluntarily reduce peak electricity use and receive a payment for doing so in response to a signal from their electric utilities).

There are other ways to contemplate diversity in the energy context:  Unlike some other states, most Californians can’t choose their power providers, though they can choose among rate “plans” (which are payment schemes, not plans to help manage energy use and costs).  EDF recognizes that a smart energy marketplace will thrive with a greater variety of competitors, products and services, and would like to see “3rd party energy service providers” able to participate (that catch-all term includes organizations that deliver energy services and products to customers at a variety of levels throughout the smart grid ecosystem).

Yesterday’s announcement by Nest Labs (Nest) is more proof that the smart grid ecosystem is alive and well.   With utility partnerships in California and Texas, among other places, Nest uses their intelligent, WiFi-connected thermostat to help customers smartly and painlessly trim energy use by learning, and mimicking, their temperature preferences automatically.  For example, the Nest’s Seasonal Savings services will alert your thermostat when new rates apply with a change of season and the device will begin slight adjustments to presets to adapt to predictable weather trends.

Source: Nest Labs

Even more exciting is Nest’s Rush Hour Rewards service that provides centralized, automated small reductions to heating or air conditioning at times of peak demand, when energy use is highest.  The offering in particular is designed to enable customers to be good environmental stewards by enrolling in peak energy trimming programs, such as Southern California Edison’s Peak Time Rebate rate.  Another benefit of participation is lower energy bills.

While customers retain the ultimate authority to override thermostat settings, the basic premise is to accept a payment to adjust settings by a couple of degrees when the electric grid is most stressed.  The trouble is involving people in energy conservation actions is less reliable and slower than communicating directly to appliances with computers.  Enter the Nest, strategically located at the interface between utility and customer, with specific dominion over the biggest energy hog in your home – the heating and cooling system.

The reality is that the electric grid as we know it is changing, driven by California’s quest to secure an environmentally safe and affordable energy system. Increasing the amount of clean, renewable energy on the grid will mean that more generation is variable (meaning electricity output from solar and wind depends on sunshine or windiness, respectively).  Up to this point, California has met this challenge by backing up clean resources with dirty fossil fuels.

Smart grid ecosystems can provide hot beds for innovation, like Nest’s learning thermostat, but they must start by getting energy pricing right.  Nest’s business model will thrive when residential customers see time-variant prices (where the price customers pay reflects the cost of electricity produced at a given time of day) that align with the actual costs of delivering power.  We’ve already seen it work in large, statistically-valid studies.

This is how Nest’s learning thermostat will make a difference to your electricity bill and the environment:

  1. Customers would upgrade their old programmable thermostat,
  2. Customers would sign up for a time-variant electricity rate (perhaps at the same they are online for the utility rebate on the new learning thermostat),
  3. On peak demand days when electricity use is highest and the utility will pay consumers handsomely to trim their energy use for a few hours, Nest Labs will signal customers’ thermostats via WIFI.  It’ll feel to customers like an air conditioner turned up a few degrees when it’s over 100 degrees outside (aka, hard to notice any difference).

For California overall it will add up to avoiding more harmful  pollution from fossil fuel power plants in the coming years and, eventually, could be tuned to work harmoniously with variable clean energy resources like wind and solar.  Nest thermostats are among a growing number of products capable of precooling buildings in advance of peak electricity demand, a strategy that will become commonplace once time-variant pricing pervades.

California has already spent billions of customer dollars installing a robust digital metering infrastructure – and it’s time to put these meters to work by enabling customers to participate in demand response and other demand-side programs, such as building weatherization.  Coupled with technologies that now allow for fast, reliable, automated ‘set-it-and-forget-it’ adjustments to electricity use – like Nest’s learning thermostat and other exciting energy innovations – we can seamlessly integrate variable clean energy resources, such as wind and solar.  In California’s energy ecosystem, customers can now choose to actively, or passively, be part of the clean energy revolution without leaving the comfort of their own nests.

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Solar, Wind Prompting Electricity Grid Innovation In California

This commentary was originally posted on EDF's Energy Exchange blog.

In a February Wall Street Journal article (“California Girds for Electricity Woes”), reporter Rebecca Smith gives an alarmist and misleading account of California energy regulators’ efforts to secure a cleaner, less expensive, more reliable electricity grid. Right now, California has plenty of power: 44 percent more generating capacity than it typically uses, including a considerable fossil fuel energy portfolio. Renewables – large scale, rooftop solar, wind, and, increasingly, energy storage – make up almost 15 percent of the grid, a percentage that will more than double in the next decade. These clean, innovative energy technologies are working to improve the system by reducing the need for fossil fuels.

The reality is that the grid is changing, driven by California’s quest to secure an environmentally safe and affordable electricity system. Increasing the amount of renewable energy on the grid will mean that more generation is variable; electricity output from solar and wind depends on sunshine or windiness, respectively. Up to this point, California has met this challenge by backing up clean resources with fossil fuels. But California’s ratepayers can’t afford to keep doing this, so instead of “girding for woe,” the CAISO and the CPUC met to proactively address our changing future – to move California towards cleaner, less expensive electric grid planning.

This new approach can increase California’s ability to rely on clean energy generation by building greater flexibility into the system – while giving more options to consumers. Not only can customer-based (“demand-side”) clean energy technologies reduce reliance on polluting power plants, they are quite likely to be more reliable and are potentially more cost-effective. Demand response, or the ability of customers to choose to save money by responding to a price or electronic signal from the grid operator in times of excess system demand, will be key to integrating large amounts of intermittent solar and wind without back-up fossil or storage. In fact, during afternoon peak demand, where supply is extremely limited in its ability to serve load, the addition of virtual generation resulting from the participation of DR into the market will actually lower energy prices.

California has already installed a robust digital metering infrastructure – and it’s time to put these meters to work by enabling customers to participate in demand response and other demand-side programs. Coupled with technologies that now allow for fast, reliable, automated ‘set-it-and-forget-it’ adjustments to electricity use, we can seamlessly integrate variable electricity resources, such as wind and solar, without disrupting energy users. Customers can choose to become an energy resource instead of fossil fuel plants.

Other “smart” resources could also help to integrate renewable resources, including weather forecasting, scheduling energy at shorter time intervals, and sharing the variability in the output of these generators across large geographical regions to smooth out local variation. While these tested technologies would be newer to the California grid, the truth is that conventional fossil fuel facilities are subject to far greater extreme ranges of temperatures than wind and solar. They fail much more frequently, and have to be taken off line for regular maintenance. But the grid was developed to manage these large forced outage rates, and the costs of handling these uncertainties at great cost to ratepayers the grid. Clean resources, coupled with greater flexibility, can create a far more reliable and less expensive system.

California’s regulators should amplify efforts to put in place the right set of solutions to integrate renewable resources – clean energy resources like demand response and other customer-based resources. The story isn’t about having too much solar and wind. It’s about how traditional fossil fuel power plants aren’t viable if we are to protect the environment and ensure a flexible, reliable and sustainable clean energy economy. This meeting of California regulators was one step forward towards integrating clean, resilient, homegrown resources by empowering consumers and sparking the investment and innovation needed to power California’s future.

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