What to watch for in utilities this year

From	RS Wood <rswood@therandymon.com>
Newsgroups	comp.misc
Subject	What to watch for in utilities this year
Date	2014-02-15 20:22 +0000
Organization	solani.org
Message-ID	<ldoi9o$vrq$1@solani.org> (permalink)

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From the How 'bout keeping the lights on department:
Title: 5 utility industry trends to watch this year
Author: Dan Yates &#38; Alex Laskey, Opower
Date: Sat, 15 Feb 2014 15:00:00 -0500
Link: http://feedproxy.google.com/~r/OmMalik/~3/raHSIb4KhU8/
Podcast Download URL: http://gigaom2.files.wordpress.com/2013/07/solar-heat-map.jpg

Last year brought about a number of interesting developments[1] in the energy
industry. Based on what we saw through the lens of our company’s 90+
partnerships with utilities across eight countries, here are five key trends
we’ll be watching closely in 2014.

1. Energy efficiency policies continue to spread worldwide

The introduction of new energy efficiency policies and regulations was
widespread in 2013 — and that momentum appears poised to continue around the
world in 2014.
[image 3][2]

Honeywell & Opower smart thermstat website

More than half of US states have now officially enacted quantitative energy
efficiency targets, and around 30 states offer concrete incentives to
utilities that drive reductions in energy demand. Yet even more states have
instituted a framework for severing the tie between utility energy sales and
revenue, thereby removing the disincentive for utilities to help electric and
gas customers lower their bills. Mississippi and Louisiana are the latest
players to join[4] the energy efficiency policy landscape.

Across the pond, European member states recently formalized their action
plans to achieve an EU-wide 20 percent reduction in energy consumption by
2020, as part of a sweeping Energy Efficiency Directive.

And in Asia — where it’s forecasted that more than half[5] of annual global
energy consumption will be consumed with a few decades by 2035 — several
countries are becoming more aggressive with efficiency policies. Japan,
Singapore, China, and many developing nations in the region are finding
efficiency to be one of the cheapest and cleanest energy resources[5] at
their disposal.

2. Natural gas and renewable energy keep chipping away at coal

America’s energy portfolio is changing. Natural gas — along with clean power
— is persisting in chipping away at coal’s segment of the US energy
generation mix.
[image 7][6]

Apple’s solar farm next to its data center in Maiden, North Carolina

Much of this shift is due to the expansion of oil and natural gas production
here at home. Domestic natural gas production is projected to grow 56 percent
between 2012 and 2040. And by 2040 — if not earlier — natural gas will
displace[8] coal as the primary fuel for US electricity generation. The shift
is already under way: in November, the Tennessee Valley Authority — located
in one of the top coal-burning states — announced[9] its plans to shutter
eight coal plants representing 3,300 megawatts of capacity.

At the same time, the share of renewable energy in the US generation mix
continues to grow rapidly.

3. Innovative utilities are exploring ways to thrive in a
distributed-generation world

How should a bakery respond when, each year, more and more of its customers
want to start baking their own cookies?

Electric utilities will confront a similar situation in 2014, as tens of
thousands of additional homes and businesses will start buying less
electricity from traditional retailers, instead opting to produce power from
their own solar panels. Rooftop solar installations have reached a furious
pace in the US: a new system is now brought online every four minutes. And
all other things equal, an increase in behind-the-meter distributed
generation (DG) means a decrease in sales and revenue for utilities.

[image 11][10]

This DG-driven revenue curtailment could produce a frightening cycle for the
power industry: reduced sales revenues could lead to less system-wide
investment, which could lead to a less cost-effective electric grid, which
could in turn lead to an increase in rates for consumers, and that could
drive more high-value consumers opting to produce their own power . . . which
could all lead to further reduced sales revenue for utilities. You get the
picture. Rinse and repeat, until the days of a centralized utility give way
to a distributed generation world.

The challenge for utilities in the coming year and beyond will hinge on
ensuring that they can constructively participate in this trend, rather than
sit on the sidelines. An innovative pack of utilities are already seizing
upon such opportunities, which include utilities’ leasing[12] solar panels to
ratepayers and creating subsidiaries that install rooftop solar outside their
regulated service territory.

In parallel to finding an optimal role in distributed generation, utilities
are naturally suited to further unlock the potential of large-scale solar. It
still accounts for the majority of installed solar electric capacity in the
US, and it is set to take off in a big way[13] in the next few years.

[image 15][14]

4. A critical mass of smart meter infrastructure is paving the way for
dynamic pricing programs

In the last 6 years, the number of smart meters in the US has grown more than
sixfold[16]. There are now more than 46 million smart meters installed
nationwide — enabling real-time communication[17] of energy data between
customers and their service providers.

This trend isn’t about to slow down. Worldwide, the installed base of smart
meters will triple from 313 million in 2013 to nearly 1.1 billion within ten
years, according to a November report[18] by Navigant Research[19].

But while smart meter deployments are becoming widespread, the use of dynamic
pricing — which better matches energy supply and demand through real-time
price changes — is not as prevalent. However, some utilities are emerging as
leaders in applying dynamic pricing to better engage their customers and
ensure system reliability — just as the concept has picked up steam[20] in
the transportation sector.

[image 22][21]

Programs like Pacific Gas and Electric’s SmartRate[23] and Baltimore Gas and
Electric’s Smart Energy Rewards[24] are at the forefront of the utility
industry’s adoption of dynamic pricing mechanisms. Their focus is on using
time-varying energy prices to keep a grid-friendly balance between
electricity supply and electricity demand, and on designing
easy-to-understand rates and rebates that help customers manage their
consumption in a personalized and energy efficient way.

5. Demand response will aid the grid’s transition toward renewable energy
supply

Fundamental changes in the electric grid’s supply and demand profile are
requiring utilities to think creatively about how to manage this transition.

On the supply side, deep investments in utility-scale renewables like solar
and wind are bringing into focus the intermittency[25] of these sources. It’s
no secret that solar electricity production grinds to a halt in the evening,
and that wind speeds often pick up after electricity consumers have gone to
sleep. And on the demand side, the rise in electric vehicles — the most
energy-intensive appliances in the history of the home — could put
substantial pressure on the grid at certain times of day.

[image 27][26]

A mix of smart technologies, customer engagement, and demand response will
help bring electricity production and consumption into the precise alignment
that the grid requires to function properly. While innovative energy storage
approaches may play a future role in managing this exacting dance between
power supply and demand, other more proven and more cost-effective options
will be required in the near term.

The impressive ability of demand response (DR) to reliably stabilize electric
systems under pressure has been on full display in the past year: DR helped
keep the lights on during hours of record-breaking summer power demand in New
York last July, and also during hours of record-breaking winter power demand
in Texas just this month.

It appears that nimble DR mechanisms (e.g. dynamic pricing and real-time
customer engagement) will become increasingly valuable assets for utilities
as a low-cost strategy to manage not just weather-driven peaks, but also the
day-to-day patterns associated with a cleaner and smarter electric grid.
[image 28]

[image 30][29]

Related research and analysis from Gigaom Research:
Subscriber content. Sign up for a free trial[31].

* What mattered in cleantech in the second quarter of 2013[32]
* Locating data centers in an energy-constrained world[33]
* Ups and downs for cleantech in Q1[34]

[image 36][35][image 37]

Links:
[1]: http://blog.opower.com/2013/12/10-energy-numbers-to-remember-from-2013/ (link)
[2]: http://gigaom2.files.wordpress.com/2012/01/dsc01024.jpg (link)
[3]: http://gigaom2.files.wordpress.com/2012/01/dsc01024.jpg?w=708&h=470 (image)
[4]: http://blog.opower.com/2013/07/with-new-efficiency-policies-energy-consumption-poised-to-go-south-in-mississippi-and-louisiana/ (link)
[5]: http://blog.opower.com/2013/08/in-asia-efficiency-proves-to-be-cheapest-and-cleanest-energy-resource/ (link)
[6]: http://gigaom2.files.wordpress.com/2013/11/applecleanpower5.jpg (link)
[7]: http://gigaom2.files.wordpress.com/2013/11/applecleanpower5.jpg?w=708&h=470 (image)
[8]: http://www.eia.gov/todayinenergy/detail.cfm?id=14211&src=email (link)
[9]: http://www.washingtonpost.com/business/economy/tennessee-valley-authority-to-close-8-coal-fired-power-plants/2013/11/14/be1e4f1e-4d60-11e3-9890-a1e0997fb0c0_story.html (link)
[10]: http://gigaom2.files.wordpress.com/2014/01/screen-shot-2014-01-15-at-7-35-16-am.png (link)
[11]: http://gigaom2.files.wordpress.com/2014/01/screen-shot-2014-01-15-at-7-35-16-am.png?w=708 (image)
[12]: http://www.forbes.com/sites/uciliawang/2013/09/10/how-utilities-use-solar-energy-to-woo-customers/ (link)
[13]: http://qz.com/137263/super-large-scale-solar-installations-are-surging-in-the-us/%20 (link)
[14]: http://gigaompaidcontent.files.wordpress.com/2012/04/ford-focus-electric.jpg (link)
[15]: http://gigaompaidcontent.files.wordpress.com/2012/04/ford-focus-electric.jpg?w=708&h=454 (image)
[16]: http://blog.opower.com/2013/09/report-smart-meters-in-us-now-generating-more-than-1-billion-data-points-per-day/ (link)
[17]: http://blog.opower.com/2013/09/a-bigger-better-and-behavioral-solution-to-help-manage-the-power-grid-announcing-behavioral-demand-response-by-opower/ (link)
[18]: http://www.navigantresearch.com/newsroom/the-installed-base-of-smart-meters-will-surpass-1-billion-by-2022 (link)
[19]: http://www.navigantresearch.com/ (link)
[20]: http://blog.opower.com/2014/01/the-future-of-dynamic-pricing-what-we-can-learn-from-paying-82-for-a-1-mile-uber-ride/ (link)
[21]: http://gigaom2.files.wordpress.com/2011/11/opowervefficiency1.jpg (link)
[22]: http://gigaom2.files.wordpress.com/2011/11/opowervefficiency1.jpg?w=708 (image)
[23]: http://www.pge.com/en/myhome/saveenergymoney/energysavingprograms/smartrate/index.page (link)
[24]: http://www.bge.com/smartenergy/smart-energy-rewards/pages/default.aspx (link)
[25]: http://blog.opower.com/2013/09/fowl-play-how-the-utility-industrys-ability-to-outsmart-a-duck-will-define-the-power-grid-of-the-21st-century/%20 (link)
[26]: http://gigaom2.files.wordpress.com/2013/07/solar-heat-map.jpg (link)
[27]: http://gigaom2.files.wordpress.com/2013/07/solar-heat-map.jpg?w=708 (image)
[28]: http://stats.wordpress.com/b.gif?host=gigaom.com&blog=14960843&post=806153&subd=gigaom2&ref=&feed=1 (image)
[29]: http://pubads.g.doubleclick.net/gampad/jump?iu=/1008864/Gigaom_RSS_300x250&sz=300x250&c=754397 (link)
[30]: http://pubads.g.doubleclick.net/gampad/ad?iu=/1008864/Gigaom_RSS_300x250&sz=300x250&c=754397 (image)
[31]: http://research.gigaom.com/?utm_source=cleantechutm_medium=editorial&utm_campaign=auto3&utm_term=806153+5-utility-industry-trends-to-watch-this-year&utm_content=gigaguest (link)
[32]: http://research.gigaom.com/report/cleantech-second-quarter-analysis-and-outlook/?utm_source=cleantechutm_medium=editorial&utm_campaign=auto3&utm_term=806153+5-utility-industry-trends-to-watch-this-year&utm_content=gigaguest (link)
[33]: http://pro.gigaom.com/2012/05/locating-data-centers-in-an-energy-constrained-world/?utm_source=cleantechutm_medium=editorial&utm_campaign=auto3&utm_term=806153+5-utility-industry-trends-to-watch-this-year&utm_content=gigaguest (link)
[34]: http://pro.gigaom.com/2012/04/green-it-q1-ups-downs-for-evs-quest-for-low-power-server/?utm_source=cleantechutm_medium=editorial&utm_campaign=auto3&utm_term=806153+5-utility-industry-trends-to-watch-this-year&utm_content=gigaguest (link)
[35]: http://feeds.feedburner.com/~ff/OmMalik?a=raHSIb4KhU8:5ZqhYuYoiCs:yIl2AUoC8zA (link)
[36]: http://feeds.feedburner.com/~ff/OmMalik?d=yIl2AUoC8zA (image)
[37]: http://feeds.feedburner.com/~r/OmMalik/~4/raHSIb4KhU8 (image)

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What to watch for in utilities this year RS Wood  <rswood@therandymon.com> - 2014-02-15 20:22 +0000
  Re: What to watch for in utilities this year Oregonian Haruspex <bob_davis_retired@yahoo.com> - 2014-02-17 00:19 -0800

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