Source: Edison International
Two seemingly unrelated announcements drew much attention in the electric utility industry recently. First, the Edison Electric Institute (EEI) (the trade group for the U.S. electric utility industry) and the Natural Resources Defense Council (NRDC) jointly recommended changing how utilities should be regulated. Second, Duke Energy announced it will sell 13 Midwest merchant power plants. These announcements are actually related because they both result from the same dramatic changes affecting the electric utility industry. As Bob Dylan aptly noted, “the times they are a-changin’.” Regulators and other stakeholders must be prepared to address these changes.
Under the traditional business model, electricity usage grew steadily. Utilities built ever-larger plants to serve this growing load. The bigger plants were more efficient than existing plants, so the unit cost for electricity steadily declined. Utilities benefited by steadily increasing their revenues. Customers benefited from declining unit costs. For utility customers, it was like paying a lower price per gallon of gasoline every time you filled your tank.
But this traditional model is crumbling, due to several factors: Read More
Ben Franklin famously said, “If you fail to plan, you’re planning to fail.” This saying certainly holds true for smart grid deployment plans, which can cost utilities several hundred million dollars. Given these high stakes, good planning is essential.
Many utilities have installed smart grids. Currently, 25% of U.S. electricity customers have smart meters, a key component of the smart grid. Some early deployments were rocky, but utilities have learned their lessons. Utilities have incorporated these lessons learned in the planning process for more recent smart grid deployments. A well-thought-out smart grid deployment plan should address the following topics: Read More
This commentary originally appeared on EDF Voices blog.
Rooftop solar owners in Arizona will pay higher costs for utility service under a new decision by state regulators, but the increase was much lower than the amount sought by Arizona Public Service, the state’s largest utility company. Both sides claimed victory. The case is part of a growing trend of more states reviewing these charges.
What is net metering?
The case involves a practice known as “net metering” where the utility pays rooftop solar owners for the excess energy the rooftop solar panels send back to the grid. Most states allow net metering. In many states, the utility company pays rooftop solar owners the full price the utility charges for power it delivers to customers. Utility companies claim this price is higher than their actual cost to produce electricity. The rooftop solar industry claims that raising costs would crush a new industry that provides cheap, clean energy and fails to recognize the benefits provided by rooftop solar.
Regulators must find the right balance between utilities and the rooftop solar industry by allowing utilities the opportunity to recover all their costs while ensuring that rooftop solar owners receive full credit for the benefits they provide to the electric distribution system.
Ohio’s clean energy standards have helped jumpstart an industry that is spurring economic development, creating jobs, boosting energy independence and cutting the state’s carbon footprint. Recently, these standards have come under attack and EDF’s own Cheryl Roberto, Associate Vice President of Smart Power, stepped up to defend them by testifying before the Ohio Senate Public Utilities Commission on Senate Bill 58 (S.B. 58). As a former Ohio Public Utility Commissioner herself, Roberto made it clear that S.B. 58 would destroy Ohio’s clean energy standards and unjustly enrich the state’s electric utilities.
Ohio adopted clean energy standards in 2008, and is one of 29 states with a renewable energy standard and one of 25 states with an energy efficiency standard. Based on these standards, Ohio will acquire 12.5% of its power by renewable energy and will reduce its energy use by 22% by 2025. The energy efficiency standard has allowed Ohio to reduce its energy use by over 3%, and the renewable energy standard has already added 466 mw of wind energy in the state, enough to power 466,000 homes. Ohio is now ranked fourth in the nation for wind energy jobs, with over 5,000 direct and indirect jobs supported by the industry.
Credit: Julia Collins
The American Legislative Exchange Council (ALEC), a group of conservative state legislators, is leading a nationwide effort to repeal state clean energy standards, including S.B. 58 in Ohio. ALEC has previously supported controversial “stand your ground” laws as well as laws classifying environmental civil disobedience as terrorism. To date, ALEC has failed to repeal clean energy standards in any state. Read More
In the 1983 thriller WarGames, Matthew Broderick plays a teen-age computer geek who unknowingly signs onto a Pentagon computer while hacking into a toy company’s new computer game. Thinking that he’s simply playing a game called Global Thermonuclear Warfare, Broderick launches the game and nearly starts a nuclear war. The North American Electric Reliability Council (NERC) will hold its own war game next month with a simulated attack on the U.S. power grid.
The drill, called GridEx II, will take place on November 13-14 of this year. The participants will include 65 utilities and eight regional transmission organizations, representing most of the nation’s electricity customers. The drill will test how well the electric utility industry and the grid itself respond to physical and cyber attacks.
A NERC Critical Infrastructure Protection Committee (CIPC) working group will begin the drill by sending participants a series of simulated physical and cyber attacks, climaxing in a national security emergency. Participants will then respond and interact with each other, just as they would in a real emergency. The simulation will last 36 hours, and the CIPC working group will evaluate the participants’ responses and provide feedback on how their actions impact the ongoing scenario. After the drill, the working group will analyze the results and prepare a report on lessons learned.
A new documentary about smart meters opens on September 5th called Take Back Your Power. The film suggests that smart meters cause illness. According to an August 12 USA Today story, the film’s director was inspired by a friend who became seriously ill after a smart meter was installed at his home. Naturally, this type of personal experience might shape one’s view on smart meters, but correlation is not causation.
Electric utilities have installed over 38 million smart meters across the country and there “has never been a documented injury or health problem associated with such meters.” According to the Federal Communication Commission (FCC), “no scientific evidence establishes a causal link between wireless device use and cancer or other illnesses.”
Smart meters send information to utilities by using radio frequencies (RFs) such as those currently used by televisions, radios, baby monitors, cell phones and wifi routers. RF signals have permeated our atmosphere for as long as we’ve had televisions and radios.
We use these devices every day, and many of them create much higher levels of RF exposure than smart meters. The exposure level depends on the strength of the RF signal emitted by the device, the duration of the RF signal and—importantly— the distance from the source. Cell phones emit up to several thousand times more RF signals than smart meters. Smart meters also transmit intermittently and briefly during the day, while we talk on cell phones for long periods. Finally, smart meters are located outside the home, while cell phones are often used close to one’s head.
If Ben Franklin lived today, he might say that nothing is certain but death, taxes and cyber-attacks. Cyber-attacks occur when individuals or groups hack into another group’s computer information systems to steal, alter or damage key infrastructure. Our nation’s electric grid is under constant attack according to a survey of electric utilities by U.S. House Representatives Henry Waxman and (now) Senator Edward Markey. The grid was the greatest engineering achievement of the 20th Century, but cybersecurity was equally unknown to those grid engineers as it was to Ben Franklin. We need to do more to protect our energy infrastructure.
The U.S. has finally called out China for repeated and pervasive cyber-attacks. Mandiant, a cybersecurity firm, released an alarming report in February 2013 regarding the ongoing cyber-attacks by the Chinese army. James Clapper, the Director of National Intelligence, described cyber-attacks as a soft war already underway and a dire global threat in his April 2013 World Threat Assessment to the U.S. House Permanent Select Committee on Intelligence. In May of this year, for the first time, the Pentagon’s annual report to Congress on the Chinese military openly accused China’s military of repeated cyber-attacks on the U.S. government and defense contractors.
Cyber-attacks are underway not only by China, but also by Iran, Russia, Al-Queda, organized crime, industrial spies, ex-utility employees and rogue hackers. The U.S. Department of Homeland Security investigated over 200 serious cyber-attacks against critical infrastructure during the first half of 2013. The electric grid was targeted in over half of these attacks. At the recent Black Hat security conference in Las Vegas, Cyrill Brunschwiler of Compass Security explained how the smart grid’s wireless network can be easily exploited to steal electricity and to cause massive blackouts. Though innovation and new clean energy technologies are key to modernizing our antiquated energy system, the electric grid is more vulnerable to cyber-attacks with increased use of smartphones, tablets, mobile apps and electric vehicles to connect with our home electronic devices. A July 2012 report by the Government Accountability Office (GAO) outlines the various threats to the electric grid.
The electric utility industry faces the risk of declining revenues as more customers install solar panels on their homes and businesses. Solar power currently supplies 2% of the country’s electricity needs, and is projected to grow to 16% by 2020. In 2013, solar panel prices for commercial installations fell 15.6%, from $4.64/watt to $3.92/watt. To protect their revenues, some utilities are raising electricity costs for solar panel owners – but with mixed results. Credit ratings agencies are also expressing concern. Is there real cause for alarm or are these companies crying wolf? Judging by one customer segment – big-box retailers – the threat is real.
The Solar Energy Industries Association (SEIA) ranks U.S. companies based on their solar energy capacity, and the top five companies on the list are big-box retailers:
- Walmart tops SEIA’s list with 65,000 kW of solar power, which is enough to supply the annual energy needs of over 10,000 homes. They recently installed ten new solar rooftop systems in Maryland, totaling more than 13,000 panels. Walmart is the largest retailer in the U.S. and in the world by revenue, with 4,423 U.S. stores and over 10,000 stores worldwide. Walmart and EDF have been working together since 2004 to reduce the Walmart’s environmental footprint. With more than 200 solar installations across the country, Walmart plans to have 1,000 solar installations by 2020. Walmart’s goal is to eventually supply 100% of its energy needs with renewable energy.
Source: ENR New York
The Wall Street Journal recently reported that electricity prices in West Texas skyrocketed over 20% this year. West Texas is home to the Permian basin, one of the world’s largest oilfields, and energy producers use hydraulic fracturing, or “fracking,” here to unlock vast new oil and gas supplies. The increased drilling, oil refining and natural gas processing uses large amounts of electricity.
Cheaper electricity supplies are available, but cannot be delivered to West Texas due to transmission bottlenecks, or “congestion.” The only power that can be delivered is from older coal plants. This leads to transmission “congestion” charges (i.e., higher energy supply costs caused by the transmission bottlenecks), which commercial and industrial consumers must pay as a surcharge on their monthly electricity bills. Using these older coal plants leads to more pollution as well because these plants burn fuel less efficiently and have higher levels of toxic air emissions.
The typical solution is to build new transmission lines to access cheaper electricity supplies. But a better and cheaper approach is to pay consumers for voluntarily reducing their electricity usage when energy supplies are tight. Known as “demand response,” this solution:
Maryland Governor Martin O’Malley continues to lead the way on climate and clean energy policy. On Thursday, he unveiled Maryland’s new Greenhouse Gas Emissions Reduction Act (GGRA) Plan. Gov. O’Malley’s plan raises the targets for renewable energy, energy efficiency and peak energy demand reduction, while re-affirming Maryland’s membership in the Northeast Regional Greenhouse Gas Initiative (RGGI). The plan adds new climate programs relating to transportation and forestry, and a new aspirational goal to make Maryland a zero-waste state.
Maryland is particularly vulnerable to climate change with 3,000 miles of shoreline along scenic Chesapeake Bay. The state ranks 42nd in total area, but 10th in coastline area. Gov. O’Malley has addressed climate change since his early days in office. In 2007, he established the Maryland Climate Change Commission to address the causes and effects of climate change in Maryland and develop an action plan. The Maryland Climate Action Plan (Plan) was issued in August 2008, and Gov. O’Malley has labored diligently to implement the plan since that time.
The new Plan calls for increasing the renewable energy portfolio standard from 20% to 25% by 2022, as well as the energy efficiency and peak demand reduction targets (with the new, higher targets to be announced at a later date). Like a true leader, Gov. O’Malley aims high and is unafraid to be different. His call to raise these clean energy standards comes at a time when some states have been unsuccessfully pressured by the fossil-fuel industry to consider lowering their clean energy standards.