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
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.
Source: Winning Communities
Around 20% of the US population lives in an area that is classified as “rural.” The US Census Bureau defines an urban area as a territory with a population of at least 50,000, or a cluster of 2,500 to 50,000 people. Rural is then defined as anything outside of that definition. Rural areas face particular challenges when it comes to energy and water use. For example, utilities are met with higher costs and often find it harder to implement new clean technologies to modernize their energy infrastructure because of the great distances between customers and an irregular patchwork of reliable resources. Besides, many system planners and thought leaders for innovative energy technologies live in urban or suburban areas and may find it harder to relate to the specific challenges of rural settings.
It’s likely that climate change will impact rural communities in different ways than it will urban areas, due to a number of factors including the types of common occupations, poverty levels and demography. Of particular concern is the “climate gap”, which refers to the lower economic and physical adaptability of rural communities. It will vary based on region, but research indicates that rural communities in the Southeast and Southwest could face particularly dire circumstances due to changes in electricity prices and water scarcity.
Environmental Defense Fund and the North Carolina Sustainable Energy Association recently joined the North Carolina Utilities Commission Public Staff and environmental colleagues in reaching an agreement with Duke Energy on its new incentive mechanism for energy efficiency investments.
The NC Utilities Commission is expected to issue a ruling on the agreement by the end of November 2013. If approved, the agreement will motivate Duke to implement energy efficiency measures as broadly and cost-effectively as possible. Duke’s efforts, in turn, can help ensure a robust market for providers of energy efficiency goods and services.
The agreement would replace Duke's avoided cost energy efficiency program, “Save-a-Watt,” with a business model known as “shared savings.” Save-a-Watt, which expires at the end of 2013, was successful in motivating Duke to make investments in energy efficiency. In fact, the company exceeded its energy savings targets, but the program was overly complex for energy regulators and stakeholders.
In contrast, the shared savings approach will split the anticipated dollar savings between Duke and its customers and set a single, flat rate of return. By sharing the savings, the model properly balances the interests of the utility and customers, and it will motivate Duke to make energy efficiency investments that save customers money. The shared savings model is the most commonly used energy efficiency utility incentive mechanism in the United States.
This commentary originally appeared on EDF's Voices blog.
Source: Department of Energy Solar Decathlon/Flickr
These days, the future is often in the news. It’s not uncommon to come upon articles about cars that drive themselves, vacation trips to space, and automated smart houses a la the Jetsons.
I don’t know much about space tourism or self-driving cars,
but I do know that smart homes and the associated technologies are already allowing for the possibility of environmental benefits and economic savings that are nothing short of futuristic.
Our utility grid is the largest machine in world. Unfortunately, however, this machine exacts human and environmental costs all the way down the line — from extraction to combustion. But we’re at the beginning of an energy revolution in home energy management systems that may make consumers key players in solving these problems.