No more BAU: These trends will change the power system and utility businesses at their core

[kristopher]

The Electricity Journal
Volume 26, Issue 8, October 2013, Pages 7–22

Rethinking Policy to Deliver a Clean Energy Future
Sonia Aggarwal, Hal Harvey

America's electricity system is in the early days of a radical makeover that will drastically reduce greenhouse gas emissions, increase system flexibility, incorporate new technologies, and shake up existing utility business models. Depending on each region's history and preference, well-designed markets or performance-based regulation can be used to accomplish power system goals of low costs, high reliability, and environmental performance.

I. Introduction
The electricity system in America, and in many other nations, is in the early days of a radical makeover that will drastically reduce greenhouse gas emissions, increase system flexibility, incorporate new technologies, and shake up existing utility business models. This transformation is already underway: it is not speculation. Managed well, this transition will give America a great boost, building a cleaner, more affordable, and more reliable grid, as well as an industry ready to profit from deploying its technologies around the globe. Managed badly, we will spend too much time, money, and pollution on obsolete power plants, leave our country increasingly exposed to system failure, and let our energy technology businesses slip to back of the pack.

The stakes are high: every single part of our economy requires reliable, affordable electricity. And the world requires a climate that does not drown our cities, dry up our farms, decimate our planet's biological diversity, or leave us vulnerable to mega-storms.

Three factors are driving change in America's power sector. First, a large number of new technologies are becoming commercially viable. Power generation technologies like solar (prices down 80 percent in the last five years) and wind (down 30 percent in the same period) are gaining market share.1 Last year, the U.S. added more wind than any other kind of generating capacity.2 Smart engineers are rethinking the grid, to transform it from a static delivery system for electrons into an intelligent web that can optimize across many variables. New solid state equipment can deliver more functionality to grid operators and replace huge, expensive, vulnerable, and hard-to-monitor transformers and switching systems. And fracking3 has transformed the economics of natural gas in America, making natural gas-fired generation an attractive option, though history has proven the value of a diverse set of power supply and demand-side resources to minimize price volatility.

There is no more business as usual: These trends will change the power system and utility businesses at their core.

Second, the advent of competition has challenged the protected and privileged status of America's utilities—catalyzing massive change in the energy industry....

Full access provided to this journal article:
http://www.sciencedirect.com/science/article/pii/S1040619013001917

[msongs]

1. rooftop solar for everyone - time for centralized corporate power companies to die nt

[roody]

2. +1, or on the ground if you have lots of room

[cprise]

3. I believe wind will allow them to continue

...in diminished stature.

[kristopher]

4. Much diminished...

Once this issue is resolved, we'll be on our way to making rapid progress phasing out carbon. All the other 'battles' like nuclear are part of a larger energy war that will be resolved only by restructuring the economic model feeding utilities. I believe the outcome is inevitable, it's only the timing that is in doubt.

[Iterate]

5. Better, but they're still not quite getting it.

I have some compassion for these authors trying to carve an understanding with old terms and concepts that don't quite fit.

Rewriting their article isn't in the cards today, so I'll try to stick to two small scale points that I don't think they adequately covered.

In a mature distributed system, the customer/client/partner(new term needed) can be at any one time, or concurrently, an end point user, a producer, or a node offering network services through storage or data with an FPGA. The same thing applies to that person's school district (flat roofs, parking lots, little summer use), or the city (bio waste to gas, co-gen heating districts), or bigger scale at the county level(wind farms, pig lots, hydro). It might help people having trouble with the concept of geographic distribution to think on a smaller scale first.

That way of seeing geographic, gen type, and market or social role realignment doesn't seem to fit the author's blocks of traditional gen/transmission/distribution/demand-side/optimize-oversight categories.

For example, there's an interesting phenomena which occurs with multiple roles, because where the authors see a a separate need of inducement for efficiency, it's already embedded at the small scale. At each of those levels I mentioned, there's a local decision to be made: produce for cash, or use now and forego the profit. In other words, for the individual, choose MTA over EV and sell the storage rather than burning it.

For all of the talk about markets in the article, they hardly mention that delaminating the customer base from its physical location would be the most disruptive.

The utility that Ursula Sladek formed in Schönau (pop. 2300) now has over 140,000 customers. EWS Schönau has done this by signing people up as their tariff provider. http://www.ews-schoenau.de/ It's been a slowly and steadily growing part of the market in DE, but now trends are sharply up.

Tariff providers themselves can have multiple roles, but functionally it breaks the link to vertical utilities and adds competition to the electricity market. Major producers have to sell to that market rather than a geographically captive one. I've been looking lately at how the tariff provider market purchase contracts work. Don't know yet. At any rate, when this market gets to be large enough, it becomes the one the wholesale market has to deal with.

[kristopher]

6. That article was the first step to this, 'America's Power Plan'

It included very detailed suggestions that are intended to move us onto a path to the "mature distributed system" you discuss.

http://americaspowerplan.com/the-plan/overview

You might want to start with something like this review by REW.
America's Power Plan: A New Series on Rapid Change in the US Power Sector
http://www.renewableenergyworld.com/rea/blog/post/2013/09/americas-power-plan-a-new-series-on-rapid-change-in-the-us-power-sector

[Iterate]

7. Thanks. Looks like I'm behind on some of the better things happening in the US

There was plenty there to comment on, but just two things for now, the first being an impression of the day-to-day battle, on every tiny point, with the coal-FFN-utility industry.

The second one was in the energy markets and how the allocation is strictly and aggressively on price alone. If some carbon index could be injected at that point of sale, as a different way of setting dispatch priority, it would drastically change the market.

I'll post some more later on the German flexibility markets, since what I'd mentioned above was more local. I can see that I might as well quote from a source with a better version of what I wrote above rather than to write it myself.

While I was looking for something else I ran across this. Mainly it's the preliminary results from six 2012 pilot studies, smart grid and new market topics, published by the Federal Ministry of Economic Affairs and Energy, in English.

Interim results of the E-Energy pilot projects towards the Internet of Energy
http://www.bmwi.de/English/Redaktion/Pdf/smart-energy-made-in-germany,property=pdf,bereich=bmwi2012,sprache=en,rwb=true.pdf

There are about a half-dozen OPs in that report alone.