The Undoing Of Utilities? A Look At The New Consumer-Driven Age Of Energy

Contributors
Written by Erin Vaughan
on April 28, 2016 No Comments
Categories : E-Features

Solar power is coming of age at an interesting time. The boom that’s predicted for the remainder of 2016 and 2017 is pushing developments in battery technology and the invention of more flexible solar cells – ideas that can help solve limitations imposed by weather and a lack of sun. Efficiencies and storage are the key pieces missing from solar’s technological equation, and having them could potentially allow homeowners to produce their own energy virtually independent from the utility grid. That should give corporations and homeowners some leverage to start dictating their own terms and prices for electricity, especially if utilities continue to resist cost-mitigating incentives.

That kind of power could spell trouble for utilities, though – a truth that has not been lost on providers. They’re all too aware that solar incentives may upset current revenues, and many utilities have been watching the signs in the market since the Edison Electric Institute released an influential study in 2013. Titled “Disruptive Challenges: Financial Implications and Strategic Responses to a Changing Retail Electric Business,” the report predicted a hardscrabble future for utilities fighting for public dollars with emerging renewable providers.

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Meanwhile, utilities are struggling to keep up with aging infrastructure that needs to be revamped to accommodate new power sources. In fact, research firm Accenture predicted that utility losses could reach $48 billion a year in the U.S. and EUR 61 billion a year in Europe by 2025, citing increases in energy efficiency and distributed generation sources as the culprit.

Solar energy, then, has the power to be hugely disruptive by restructuring and breaking up utility dominance and allowing consumers to drive markets.

However, disrupting utilities isn’t as simple as merely finding the “Uber for electricity.” In the cab industry, the challenges were largely service-based issues that Uber, a more streamlined technology, was able to overcome. But utilities don’t just dish out energy – they’re a public service. They perform complicated load balancing that helps mitigate demand and prevent energy events. Decentralized energy may initially appear to provide residents with unlimited freedom, but it also puts homeowners at risk for blackouts and poor overall power performance, with little or no backup options to pull from in the event of an outage.

In California, for instance, where a mandate from the California Public Utilities Commission requires the state to generate a third of its energy from renewables by 2020, clean energy can sometimes result in very erratic loads. In fact, just this year, generation levels were so high that the state had to ask solar farms to stop producing to keep too much electricity from overwhelming the grid.

The magic equation in this case may be finding a utility-scale storage solution through which energy can be pulled to balance out demand, combined with time-of-use pricing and control structures. As to the first point, that requires a rethinking of battery technology. Electricity in its raw form is very difficult to store, as the high temperature leads to internal resistance that degrades battery performance. Essentially, the longer you store energy in a conventional battery, the harder the battery has to work, and the high amounts needed to support the grid would be virtually impossible to maintain. But convert that electricity to another energy form, like heat or compressed air, for instance, and it can be stored for much, much longer.

There are many different groups striving to find the solution to large-scale renewable storage, ranging from massive, improved lithium-ion batteries to compressed air that can be released to power a generator when needed. One of the more interesting permutations of thermal batteries even has residential water heaters acting as both storage units and load balancing units.

In a report produced for the National Rural Electric Cooperative Association and other groups, The Brattle Group called electric water heating “the hidden battery” – not only can water heaters store thermal energy locally until it’s needed, but with smarter controls, they can also be turned off and on by local utilities to help smooth out energy use without any loss of quality for residents. Similarly, time-of-use pricing programs for electric vehicles (EVs) have demonstrated positive results when offered to EV owners – incentivizing residents to charge high-power devices at night might be one of the missing ingredients needed to even gaps in demand and allow for a renewable power grid.

Managing grid demand from the end-user side requires the deployment of smarter utility controls, however. But that’s where the grid is headed. The water heater initiative, for instance, is being driven by technology companies developing more sophisticated automated response controls that allow utilities to adjust demand on the fly and manage storage capacity by communicating back and forth with smarter devices. The grid needs to go in the same direction as home appliances – toward a more connected and automated future.

Although the dust is still settling on the renewable grid debate, one thing is clear: Utilities will prosper if they are able to embrace the new role of residents in energy generation and load management, rather than resisting it. Like many industries, utilities must now position themselves as service providers – whose greatest strength is unifying and balancing the grid and managing emergency events. A little disruption may be a good thing, in the long run, to promote more advanced technology and a more open conversation between residents and their energy providers.

Erin Vaughan is a blogger who currently resides in Austin, Texas, where she writes full time for Modernize.com.

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