Not Your Grandpa's Utility Business Model
Although it’s been a while since the term “utility death spiral” has been trotted out in the media, there’s no doubt that utilities are under pressure to modernize and innovate their business models. This week we saw several significant moves from utilities that may move us toward to a 21st Century electricity system, from an Arizona utility looking to install residential solar panels — for free — to a report that embraces electric vehicles for future utility growth. Plus, a New York utility has filed a rate case that includes distribution automation, microgrids-as-a-service, and community solar.
Arizona utilities’ relationship with solar energy is complicated (and we’ll cover it in more depth next week on Advanced Energy Perspectives). Arizona’s largest utility, Arizona Public Service Co. (APS), announced a plan this week to put solar panels on 3,000 homes at no cost to the homeowners. In return, the homeowners would receive a $30 credit on their electricity bill for the next 20 years.
“This is an effort to reassure our customers that this is not the staid, old, stodgy utility company,” said Daniel Froetscher, senior vice president of transmission, distribution and customers. “Instead, we like to think of ourselves as somewhat creative, entrepreneurial and forward thinking.”
APS predicts that the program would add 20 megawatts to the utility’s capacity, and is expected to cost between $57 million and $70 million.
But, as Greentech Media points out, some in the solar industry may see the move as a “trojan horse.” Although 20MW of rooftop solar would be a huge number almost anywhere else, Arizona residents installed 73MW in 2013.
"The irony here is that APS has spent two years complaining about how terrible solar is [and] how it’s a massive problem for the grid. But now they’re saying it’s fine, as long as they can control it entirely," said Will Craven, a spokesperson for the Alliance for Solar Choice.
Utilities are looking for other ways to modernize and prove that they are not “old” and “stodgy.” Edison Electric Institute put out a new report calling electric vehicles the utility industry’s “biggest opportunity” and a “quadruple win.” EV integration provides increased demand, new ways to interact with consumers, meet certain advanced energy goals and mandates, and lower operating costs for their own vehicles, the report argues.
As a recent Opower report pointed out, EV owners use more electricity than the average consumer, but consumers with both an electric vehicle and a rooftop solar system actually helped to stabilize and smooth demand. It bears repeating: EVs and rooftop solar are two great tastes that taste great together!
One of the challenges facing utilities is stagnating demand. Michael Kanellos, writing for Forbes, discusses a new report from the Consumer Electronics Association that describes a 12 percent decline in power consumed by home electronics between 2010 and 2013. Why is power consumption declining so quickly? “In a word,” Kanellos writes, “it’s tablets.”
As tablets have displaced TVs, laptops, and desktop computers, the tablets’ smaller screens consume much less energy overall. So watch Netflix on your iPad and chalk it up as a win for advanced energy.
Finally, in the midst of New York’s Reforming the Energy Vision proceeding (PowerSuite users can follow the Public Service Commission docket here), Central Hudson Gas & Electric is getting out in front of the coming changes with a new rate plan that places advanced energy front and center. The rate case filed with the PSC (follow it on PowerSuite), titled “Value for our Valley,” includes distribution automation, microgrids-as-a-service, and community solar projects.
Katherine Tweed, writing for Greentech Media, points out that the Central Hudson filing comes in response to the PSC’s draft plan for utilities to become distributed system platform providers, or DSPPs, with responsibility to “enable systemwide efficiency and resiliency.” Although the transition to DSPPs would take years after the lengthy New York proceeding wraps up, Central Hudson isn’t waiting around.
The microgrid portion of the proposal is especially interesting, with Central Hudson looking to install and operate microgrids in rural regions and in areas with critical facilities. While hospitals and college campuses have typically been microgrid leaders, Central Hudson could be the first utility to make use of microgrids on a large scale.
Lexie Briggs is the Social Media Associate with Advanced Energy Economy. Lexie graduated in 2007 from Lewis & Clark College in Portland, OR with a degree in International Relations and a song in her heart. Prior to working at AEE, Lexie worked with the Clean Economy Network and worked to develop a nation-wide network of volunteer chapters and a social media presence. In her spare time she ...
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