Last year, the trade association for the utility industry, the Edison Electric Institute (EEI), published a whitepaper on the disruptive challenges facing the utility industry. In summary, EEI’s thesis was that the existing utility business model (centralized, fossil-fuel based generation) is under threat from on-site, distributed generation as more customers switch to cleaner, and often cheaper, solar power. The white paper poses an important question: How can utilities acquire the revenue needed to keep the electric grid humming and provide reliable power to all customers if a growing number of people are producing their own electricity?
In business, one of the most difficult problems that companies face is how to adapt a successful business model to technological or social changes that threaten that business model. Wang, Unisys, DEC and Amdahl were all big computer companies in the 1970’s that clung to an obsolete business model in the face of distributed computing. IBM and HP, on the other hand, adapted their business models and generally thrived.
Over the past year, we have seen several utilities tackling this challenge head-on by investing in distributed, renewable energy projects. In September, I wrote about how NextEra and NRG were voluntarily developing solar investments and how Direct Energy and Viridian were investing in solar installations developed by SolarCity. Read More
In the last week of December, the New York Public Service Commission issued an Order that signals big changes coming soon to New York’s electric utility landscape. The Commission made it clear that it wants clean energy resources, including on-site, distributed power generation (such as solar PV), energy efficiency and energy load management strategies, to play a central role in how the energy system brings value to customers. In contrast to the peripheral role clean energy resources have played in the past, the Commission is now ready to make them a priority, signaling a willingness to transform the regulatory landscape.
The Order was one of a trilogy arising from three intertwined proceedings, all of which were considered by the Commission on December 19, 2013. One of those three – perhaps the most concrete and immediate – was a proceeding concerning the initial capitalization of New York’s Green Bank, a new entity that aims to advance clean energy funding in New York State. That proceeding addresses a proposal to leverage ratepayer funds and private investment to systematically address market barriers to private financing of distributed generation, energy efficiency and demand management projects, with an ultimate goal of building a clean energy marketplace that can stand on its own. The other related proceedings concerned two New York State programs that draw on the same funding sources that are now being made available for the initial capitalization of the Green Bank: New York’s Renewable Portfolio Standard (RPS) and the Energy Efficiency Portfolio Standard (EEPS).
This Order concerns various proposals to improve and streamline the EEPS programs. Some of these changes are effective immediately, such as the elimination of duplicative reporting requirements. Other, more substantive program modifications – such as the changes to the structure of EEPS and other clean energy programs, as well as the responsibilities of various entities (including the Commission’s Staff, the New York State Energy Research and Development Authority (NYSERDA) and the utilities themselves) – are to be addressed through a new “E2 working group,” which is to be formed by February 1, 2014. This new working group is tasked with “sharing and developing concepts for an optimized E2 portfolio that supports a scale-up of energy efficiency and overall system efficiency,” for a program launch by the end of 2015. Read More
On Monday, Google announced it is spending $3.2 billion to buy Nest Labs, the trailblazing company funded through its Google Ventures program and responsible for transforming “unloved” home products into beautiful, smart appliances. That’s a lot of money for a business with only two products: a thermostat and a smoke detector. Nest is not exactly reinventing the wheel, right? Well, actually they are.
Welcome to the Smart Home
Google’s move is a starting shot in the race to become the go-to smart home provider, putting in place stepping stones to realizing a future in which our homes will become one ecosystem – integrated and functioning as a whole. Customers are looking for smart appliances that can notify you when they are wasting energy or not performing properly. Plus, these innovative technologies provide customers with more opportunities to engage with and benefit from other cost- and energy-saving solutions, like demand response, rooftop solar power and electric vehicles. This puts customers in the driver seat, giving them insight and control over their daily lives in ways never before imagined (even if just to use automated, “set-it-and-forget-it” functionality).
The Nest thermostat learns household behaviors and habits and sets temperatures at the optimal comfort and energy-saving level accordingly. Nest also enables residents to control their electricity remotely and provides the interface needed to participate in demand response, an energy management program that rewards participants for conserving energy during peak, or "rush hour," times on the electric grid. Read More
This commentary originally appeared on our EDF Voices blog.
It’s no secret that electricity generation requires substantial amounts of water, and different energy sources require varying amounts of water. Nor is it a surprise that Texas and other areas in the West and Southwest are in the midst of a persistent drought. Given these realities, it is surprising that water scarcity is largely absent from the debate over which energy sources are going to be the most reliable in our energy future.
Recent media coverage has been quick to pin the challenge of reliability as one that only applies to renewables. The logic goes something like this: if the sun doesn’t shine or the wind doesn’t blow, we won’t have electricity, making these energy sources unreliable. But if we don’t have reliable access to abundant water resources to produce, move and manage energy that comes from water-intensive energy resources like fossil fuels, this argument against the intermittency of renewables becomes moot.
Moving forward into an uncertain energy future, the water intensity of a particular electricity source should be taken into consideration as a matter of course. Read More
Since Superstorm Sandy stranded thousands without power across the state of New York in 2012, it has become clear that infrastructure upgrades are a necessity for the state. The current, outdated energy system is not up to the challenges of the present day and a changing climate. A year after Sandy, New York has a plan. Last week during his State of the State Address, Governor Cuomo announced the allocation of $40 million to the new Community Grids NYPrize Competition, a program which promises to help New York achieve a more sustainable, resilient energy future.
The competition, aimed at jump-starting at least ten “independent, community-based electric distributions systems” across the state by the end of 2014, is a highlight of a larger $17 billion plan to prepare for future storms like Sandy. Upon full implementation, the NYPrize Competition Community Grids are expected to support approximately 40,000 New York residents.
A “community microgrid” is a new type of energy system that leverages decentralized, local, clean power sources such as solar and wind that are able to operate independently of the centralized electric system. Microgrids are small-scale distribution systems that link multiple distributed energy resources (DERs) into a network that can generate, store and control its own power. Microgrids can operate in tandem with the main power grid during normal conditions, but can disconnect and function as an independent “island” of stable power if the main grid fails. The use of microgrids greatly reduces the number of outages and allows more people to keep their lights on during (and in the wake of) extreme weather events. Read More
The Sustainable FERC Project, a coalition of environmental and clean energy organizations, launched its new website today: www.sustainableFERC.org. The site will inform the public and policymakers about the coalition’s efforts to increase the amount of clean, low-carbon energy powering the nation’s electric grid, which focus on the Federal Energy Regulatory Commission (FERC) and the regional entities regulated by FERC.
FERC is a federal agency whose activities include regulation of transmission and wholesale sales of electricity in interstate commerce. Working on behalf of its coalition partners, the Sustainable FERC Project develops and advocates for federal policies and regional implementation and practices that will give rise to a cleaner, more efficient energy system. The coalition’s top priorities include removing the barriers to getting clean energy on the transmission grid, maximizing the use of energy efficiency in planning and facilitating a transition to a cleaner energy future.
Source – Windpower Engineering Development
EDF’s work as a member of the Sustainable FERC Project coalition complements our own Smart Power Initiative, which is working, primarily through state-level advocacy, to change the trajectory of the U.S. electricity system to help avoid dangerous climate change through smart power policies and clean energy investments. The Smart Power Initiative focuses on ensuring that the right state policies are in place to allow for better integration of clean energy resources into the power grid.
Optimizing the environmental performance of the U.S. electric grid – which is sometimes called the “largest machine on the planet” – requires environmentally-sound policies and practices at all levels to drive system planning and operation. The new website (www.SustainableFERC.org) will feature issue analysis, coalition comments filed with FERC and regional grid organizations and links to blogs written by representatives from the coalition. It should become a go-to site for those wanting to deepen their understanding of environmentally-important smart grid developments in the federally-regulated portions of the U.S. electric system.
This commentary originally appeared on our EDF Voices blog.
If renewable energy is a good thing, then a lot of renewable energy is a very good thing, right? Not exactly, according to recent articles in the L.A. Times and Forbes about challenges posed by the growth of renewables. But, as we’ve pointed out, the issue here is not too much renewable energy, but rather a vulnerable U.S. electric grid built for the last century.
It’s essential to remember the bigger picture in order to arrive at the truth of the matter: If we are to avoid catastrophic climate change, renewable energy is a vital part of the solution. And while an unprecedented abundance of renewable power may raise complex questions about how to integrate these resources, it also underscores the need – and vast opportunity – for critical energy infrastructure improvements. Our response as a nation should not be to shrink from the challenges of renewables, but rather to keep working toward a smarter, more resilient energy system to meet the needs of the 21st century and beyond. Read More
On November 18th, the Smart Cities Council released the Smart Cities Council Readiness Guide at the Smart City Expo World Congress in Barcelona, Spain. I am privileged to be a member of the Smart Cities Council Advisory Board, and in such a capacity, served as a review for the Guide.
The Smart Cities Council Readiness Guide is the first of its kind—a comprehensive, vendor-neutral handbook for city leaders and planners to help them assess their current state of technology and give them a roadmap for developing a smart city.
It was produced in collaboration with some of the world’s top smart city experts and includes technology recommendations for a city’s most important responsibilities: buildings, energy, telecommunications, transportation, water and wastewater, health and human services, public safety and payments.
My reviews were solely of the energy and water chapters, but the Guide as a whole offers a collection of guidelines, best practices and more than 50 case studies as well as 27 proven principles that will enable cities to achieve a smart city status. City planners will be able to identify the best path forward for their particular city, creating a customized plan that will work, even if development of the plan is gradual. Read More
Guest Blog Post By: R. Blake Young, President and CEO of Comverge
The complex task of managing peak energy demand is not something that should be addressed in a piecemeal fashion, and this is particularly true in the demand response industry. For reference, demand response (DR) balances supply and demand, providing peaking capacity to utilities without investments in new plants. DR incentivizes change in customer energy usage patterns to reward lower electricity use at times when system reliability is jeopardized or the price of electricity is higher.
While Comverge supports both residential and commercial and industrial (C&I) demand response programs, it’s important to remember that the residential sector is an incredibly valuable and essential part of any energy management program. The infographic below illustrates why residential demand response is so important to our nation’s energy mix. Read More
Over the past two years, Texas’s changing energy landscape has been a focus of EDF’s work. In our Texas’ Energy Crunch report from March 2013, we highlighted that Texas has a peak capacity constraint – meaning that the power grid becomes strained when, for example, everyone is using their air conditioning units on hot summer afternoons. This challenge, coupled with increased climate change and drought, signal the need to prepare by adopting a smarter grid and cleaner resources.
The Public Utilities Commission of Texas (PUCT) and the Electric Reliability Council of Texas (ERCOT) have been engaged in this conversation and various proposals have been laid on the table to determine what Texas’ energy future will look like. EDF maintains the position that, whatever reforms are made, customer-facing, demand-side resources – defined here as demand response (DR), renewable energy, energy efficiency and energy storage – must play a key role to ensuring reliability, affordability, customer choice and environmental improvements.
Energy-Only Status Quo or Capacity Market or…?
Texas’ current energy-only market structure pays power plants only for the energy they produce. This is beneficial in that generators are not overcompensated, but the downside is that energy companies aren’t incentivized to build in Texas and energy management providers (DR companies) are not viewed as equal players. Energy prices are low due to an upsurge in cheap, abundant natural gas and wind – and without a guarantee for a high return on investment, companies will not take the risk of constructing costly new power plants. Read More
Also posted in Demand Response, Energy Efficiency, General, Renewable Energy, Texas
Tagged Capabilities Market, Capacity Market, Energy-Water Nexus, ERCOT, PUCT, Texas Energy Market, Texas Public Utilities Commission, Third Way