Utilities are getting ready for life with distributed generation — report

Source: Krysti Shallenberger, E&E reporter • Posted: Thursday, August 13, 2015

It’s no secret utilities nationwide see distributed generation (DG) — most commonly in the form of rooftop solar — as a major upstart to their business model.

Now Black & Veatch’s annual report bolsters that opinion but also notes that utilities are cognizant of such challenges and, more importantly, are preparing to clear the hurdles.

Of the 435 utilities responding to surveys for the annual report, about 60 percent consider DG a major or minor threat with long-reaching consequences.

Utilities must catch up to evolving consumer trends, regulations and an ever-increasing demand for renewable energy, the report suggested.

“Traditionally, utilities are planning on their load increasing and building on those capacities,” said Ryan Pletka, associate vice president of renewable energy for Black & Veatch. But now utilities are facing pared-down net load while watching an increase in electric generation from distribution generation.

The jump in customers creating their own electricity — and selling their excess energy back to the grid — has prompted utilities to contemplate various ways to recoup costs and manage the rising power on the grid.

This change has sparked battles nationwide among rooftop solar users, solar financiers like California-based SolarCity Corp. and utilities.

As these arguments play out, utilities have also increasingly turned to restructure their own services to cater to new consumer trends, Pletka said, while utility regulators revamp policies to make room for an expanding demand for renewable energy.

Take Southern Co.’s subsidiary Georgia Power, which just rolled out a rooftop solar installation program thanks to a state regulation opening the door to solar providers (EnergyWire, July 1). Arizona Public Service Co., a major power player in the state’s utility scene, also has developed a similar program.

Utilities have used a “cost-shift” analysis, arguing rooftop solar users don’t pay their fair share to maintain the grid (EnergyWire, April 24), and have instead proposed various fees or attempted to restructure rates paid out in net-metering policies. Rooftop solar advocates have pushed against such proposals, setting the stage for utilities to rethink other paths to meet customer demand for more renewable energy without hurting profitability and rates.

Additionally, 30 percent of surveyed utilities said they are planning to shell out funds for “microgrids,” according to the report, while eyeing smart thermostats, meters and renewable-battery storage combinations for the future.

“I’ve seen all of these approaches that our clients are looking at,” Pletka said. Smart thermostats and meters could soon appear in power providers’ portfolios to “help manage distribution” and handle the intermittent solar and wind on the grid, Pletka added. Other tactic could include pairing up with independent providers and financiers like SolarCity.

While SolarCity and similar developers are interested in pairing up with utilities, Pletka said utilities in the report appear to want almost-exclusive control over their assets.

“I think utilities have gotten their hands around the technology and gotten comfortable owning technology without additional partnerships,” Pletka said. “In two or three years, [we’ll] definitely see more of that.”