Activist energy group puts forth vision for Calif. electric sector

Source: Debra Kahn, E&E reporter • Posted: Thursday, August 13, 2015

A new paper by a group of California energy companies is aiming to set out a vision for how the state’s electricity grid should function in 2030.

The¬†paper¬†released today by the Advanced Energy Economy Institute, a nonprofit founded by the activist investor Tom Steyer, is intended to “further inform” stakeholders as they come up with policies to support California’s push to reduce greenhouse gas emissions and increase renewable energy. The state has a renewable portfolio standard of 33 percent by 2020, and a bill currently moving through the Legislature would increase it to 50 percent by 2030.

The report came out of a February meeting that AEEI held with utilities and energy companies, including Southern California Edison Co., Pacific Gas and Electric Corp., the California Independent System Operator, Bosch, ChargePoint Inc., EnerNOC Inc., General Electric Co., Itron Inc., Navigant Consulting, Siemens AG, SolarCity Corp., Stem and SunEdison Inc.

The paper depicts a grid that has incorporated a spate of current market developments, including increases in distributed generation, energy storage, electric vehicles, building efficiency and demand response.

Along with that, the report calls for broadening customers’ engagement with the grid and for re-evaluating the array of functions the grid currently provides with an eye toward assigning value to the costs and services that each participant incurs.

Utilities and solar companies are currently engaging in a similar debate over the “value of solar” relative to other grid services as the California Public Utilities Commission figures out the next version of California’s net metering program, which pays distributed energy systems for the excess electricity they feed back to the grid (EnergyWire, Aug. 6).

The AEEI report says that the state may need to engage in a process of trial and error to find the best regulatory models.

“Regulators need to adopt an ‘incubator’ mentality,” it says. “Not all products and services that go into the incubator are going to be successful. There will be failures and there will be successes; but there has to be a willingness to allow utilities to take some reasonable risks and encourage innovation and entrepreneurship, and a willingness to pass at least some costs of failed enterprises on to end-use customers.”

Eventually, it says, utility-scale and customer-owned resources will be fully integrated, as will the Western transmission grid.

The paper envisions multiple revenue streams for traditional electricity customers. A hotel that can earn money from installing energy-saving refrigerators can also adjust its usage of on-site batteries to take account of changing wholesale electricity prices.

Residential customers can become “prosumers,” in the report’s parlance, by connecting their autonomous electric vehicles to the grid and receiving credits on their electricity bills corresponding with hourly wholesale electricity prices.

The paper calls for attempting to engage customers by pricing electricity or providing other kinds of signals based on real-time changes in electricity supply. Customers could also be notified of even more specific, regional conditions like air pollution alerts or congested transmission lines.

“Customers have long been accustomed to the stable rate plans and have not been expected to be engaged consumers,” the report says. “This has negatively impacted the development and use of actionable, time-varying price signals sent to customers to automate or encourage behavior that might align with system objectives to optimize demand.”

The CPUC is hosting a panel on the paper Thursday with executives from SolarCity, SunPower Corp. and other energy companies.