Energy Exchange

Here Comes the Sun: How California is Bringing More Renewables to the Grid

By Larissa Koehler / Published: March 10, 2015

Have a sunny dayAsk most people what the Beatles and California have in common and they might very well be at a loss. However, the answer is pretty simple: they are both unabashed trendsetters in the face of resistance – the former in their musical style and the latter in its clean energy policies.

Not content with setting a Renewable Portfolio Standard that ends at 2020, Governor Jerry Brown and state legislators are pushing for the Golden State to get 50 percent of its energy from renewable resources by 2030.

To meet this ambitious target, California must build a system that is largely based on renewable electricity, like wind and solar. This is not an easy task. The primary reason? Sunshine and wind are only available at certain times of the day and can be variable during those times.

Traditionally, managers of the electricity grid have relied upon dirty “peaker” power plants – usually fossil fuel-fired and only needed a couple of days a year – to balance the grid during periods of variability or when electricity demand exceeds supply. But, in a world where 50 percent of our energy comes from renewable sources as a means to achieving a clean energy economy, we can’t rely on these dirty peaker plants to balance the variability of wind and solar.

Luckily, technology is available today that can help fill the gap of these peaker plants – and the California Public Utilities Commission (CPUC) is starting to embrace it. Read More »

Also posted in Air Quality, California, Cap and Trade, Clean Energy, Climate, Demand Response, Electric Vehicles, Energy Efficiency, Energy-Water Nexus, Grid Modernization, Renewable Energy / Tagged | Read 1 Response

If Time-Variant Electricity Pricing Offers So Many Benefits, Why Don’t We Have More of It?

By Elizabeth B. Stein / Published: March 2, 2015
With time-variant pricing, people can choose to run their dishwashers at times of day when electricity is less expensive.

With time-variant pricing, people can choose to run their dishwashers at times of day when electricity is less expensive.

Today, most residential electricity customers are charged the same price regardless of when the electricity is actually being used. Charging customers a uniform price for electric service looks a bit like buying groceries by the cart instead of by the items purchased (e.g., apples versus filet mignon) – simple, to be sure, but so riddled with inefficiencies that no one would actually propose operating a supermarket that way. A cartful of filet mignon may weigh the same as a cartful of apples, but the value of these items and the cost of bringing them to market is drastically different. Similarly, electricity costs differ depending on the time of day power is produced and delivered.

Time-variant electric pricing addresses this issue by charging customers different prices depending on when electricity is used, reflecting the true costs of producing and delivering electricity. This gives customers greater control over their electricity bills by allowing them to reduce their energy use at higher-cost times. A recent blog post by my colleague, economist Beia Spiller, explained how time-variant electricity pricing can benefit customers, utilities, and the environment, and described several different types of time-variant pricing.

Given its compelling economics, one would think time-variant pricing would be widespread. Part of the reason it’s not is sheer inertia, but there’s more to it than that. Read More »

Also posted in Clean Energy, Grid Modernization, Utility Business Models / Comments are closed

People-Powered Pricing: Nudging Illinois toward Time-of-Use Electricity Plans

By Jamie Fine / Published: February 17, 2015

TOU graphic KOThis week I submitted testimony in support of a petition by the Citizens Utility Board and, my shop, EDF, to urge the Illinois Commerce Commission to require Commonwealth Edison (ComEd) and Ameren, two of Illinois’ biggest utilities, to provide families and individuals with new ways to reduce their energy bills: electricity pricing based on the hour of the day. This “Time-of-Use” (TOU) option provides times of the day when electricity will be much cheaper than the all-day, “flat” electricity pricing currently used today. Such electricity rates would reward energy-efficient customers and those who shift electricity use away from “peak” hours—when demand is high, prices skyrocket, and power plants produce the most pollution.

Our petition to the Illinois Commerce Commission, which is in charge of regulating electric utilities in the state, asks for ComEd and Ameren to offer optional rate plans beginning 2016. With voluntary TOU electricity pricing, families with digital meters can enjoy lower electric bills by running certain appliances, like the dishwasher, when electricity is cheapest, such as early in the morning or late in the evenings. However, the benefits go far beyond households that participate. Cutting energy use at high-demand times, like the afternoon, lowers electricity prices for everyone, reduces stress on the power grid, and offsets the need for expensive, polluting power plants.   Read More »

Also posted in Grid Modernization, Illinois, Utility Business Models / Read 6 Responses

All Electricity is Not Priced Equally: Time-Variant Pricing 101

By Beia Spiller / Published: January 27, 2015

clock-95330_640In the U.S., the electricity sector accounts for over a third of the country’s yearly greenhouse gas emissions, contributing more to climate change than any other sector, including transportation.

Furthermore, electricity costs have increased dramatically over the years, and are projected to continue their upward trend. Utilities and regulators have made great strides in promoting renewable energy, increasing the efficiency of the power grid, and reducing harmful pollution. However, customers, too, can be part of the solution by better managing their use of electricity – especially during those times when it is most expensive and dirty to produce.

Electricity is more expensive during ‘critical peaks’

The cost of producing electricity – and the carbon emissions associated with it – varies significantly throughout the day, depending on electricity demand at any point in time. For example, when a heat wave occurs and many customers begin cooling their homes after work, demand skyrockets and creates what is known as a ‘critical peak.’ Read More »

Also posted in Clean Energy, Grid Modernization / Read 4 Responses

Another Step Forward for Demand Response, FERC Order 745 Case

By Michael Panfil / Published: January 23, 2015

supreme-court-544218_640Over the past several months, we’ve been providing updates on the ongoing litigation surrounding Order 745 – a vital, federal rule on demand response. As a low-cost, environmentally beneficial resource, demand response relies on people and technology, not power plants, to manage stress on the electric grid during periods of peak energy demand. Simply put, demand response pays people to conserve energy when it matters most – a win-win for people and the environment.

But this critical energy management tool has also been subject to an amazing amount of scrutiny (which we’ve covered here, here, and yes, here, as well). In short, the thorny issue boils down to this: a recent court decision found that the federal agency responsible for regulating demand response didn’t have the authority to do so.

When the decision came down, many were shocked. The general assumption had been that this agency (known as the Federal Energy Regulatory Commission or “FERC”) certainly was within its rights to issue Order 745, a set of rules for how demand response would function in our nation’s energy markets.

And last week, the United States Solicitor General sided with the “general consensus” on Order 745. Read More »

Also posted in Clean Energy, Demand Response, Grid Modernization, Utility Business Models / Tagged | Comments are closed

Smart Meters Need Effective Electricity Pricing to Deliver Their Full Benefits

By EDF Blogs / Published: December 16, 2014

By: Beia Spiller, Economist, and Kristina Mohlin, Economist

walletSmart meters, which provide detailed electricity use data throughout the day, are a critical piece of a smarter, more resilient 21st century energy system. But they are not a cure-all for modernizing our antiquated power grid.

In Matthew Wald’s recent New York Times article, entitled “Power Savings of Smart Meters Prove Slow to Materialize,” he argues that smart meters have failed to produce measurable savings. And we agree – but not because smart meters themselves have failed. Rather, most customers with smart meters don’t have access to people-powered, or time-variant, electricity pricing, which creates opportunities to save money. This is a missed opportunity for customers, utilities, and the environment.

Time-variant pricing better reflects electricity costs

Throughout most of the country, the price paid for residential electricity is the same regardless of the time of day when it’s consumed. This arrangement is a byproduct of an earlier era, one in which electricity information was difficult to convey and the actions of individual customers was impossible to gauge in real time. In practice, electricity is actually dirtier and more expensive to produce and transmit at certain times of the day, particularly when everybody wants it – for example, at 6pm during a heat wave when customers are cooling their homes. Also, during this high-demand time, energy prices spike and electric utilities flip on expensive and dirty fossil fuel “peaker” power plants to meet energy demand. From an economic point of view, it would be more efficient for electricity used at these peak demand times to have a higher price. Read More »

Also posted in Clean Energy, Grid Modernization / Read 7 Responses