Utility Execs Weigh In On Energy Storage And Solar

Posted by Joseph Bebon on March 16, 2016 1 Comment
Categories : Featured, New & Noteworthy

Almost half (45%) of utility industry executives surveyed by Accenture worldwide, and 64% in Europe, reported that the traditional electricity distribution model is no longer fit-for-purpose. Unless the industry undergoes a digital, regulatory and business model transformation, utilities warn of increasing pressure on supply reliability and prices, according to Accenture’s Digitally Enabled Grid research, now in its third edition.

The proliferation of distributed generation has been a key challenge for utilities. Accenture’s survey of 85 industry executives across 18 countries finds that more than half (56%) expect grid faults to increase by 2020 as a result of distributed renewable generation, such as residential solar photovoltaics. In addition, improving economics could make electricity storage another key disruptor, with 32% of executives expecting it to cause an increase in grid faults, up from 14% in 2013.

Complementing the survey, Accenture conducted economic modeling to assess the potential impact of growing electricity storage on the grid network. The company says the falling price of energy storage could strengthen the economics of residential PV deployment in places like Germany, where the price for selling renewable generation back to the grid is lower than the retail price, or places like California where the utility charges a premium for electricity consumption during periods of peak demand.

“As consumers invest in residential storage and are able to use stored electricity instead of purchasing it from the grid at times of peak demand and price, distribution businesses will face a decrease in demand and consumption on their network. This will impact the utilization of grid resources, putting revenues at risk,” says Stephanie Jamison, global managing director of Accenture Smart Grid Services.

“However, we see utilities learning from their experience with PV, where they faced rapid growth in residential deployment without sufficient means to manage the effective integration of the new supply, and lagged in developing complementary services, like installation, maintenance and dispatch optimization, leaving the doors open to new competition. Utilities recognize that PV-plus-storage represents an existential threat to their businesses if they don’t get into the game early.”

Although storage promises to fast become a new battleground, with 66% of executives expecting competition in this area to rise in the next five years – up from 48% in 2013, utilities executives are not standing by. As many as 77% are already investing or plan to invest in storage solutions in the next 10 years.

“While storage could trigger an additional disruptive deployment of small-scale renewables, it also has the potential to improve grid operations,” explains Jamison. “If deployed across the network, it could reduce grid faults caused by renewable electricity exports, where large amounts of excess distributed generation are dumped on the grid at times of low demand and high output. What is more, our modeling showed that relatively small-scale network storage is enough to reduce exports to the grid from a typical residential PV system by 50 percent.”

In addition, Accenture says investing in storage solutions could create new revenue opportunities for utilities, with almost half (47%) of the executives surveyed expecting moderate or significant revenue upside from these investments by 2030. In fact, in the next five years, 49% expect to be offering network-level storage services, and 30% are likely to be offering customer residential storage services, such as maintenance.

Accenture says that in order to reap storage deployment benefits, utilities need to transform the role of their distribution business. Yet most utilities are still at an early stage of this journey, with only 15% of utility executives worldwide, and 29% in Europe, saying this transformation is already under way.

According to the company, the current regulatory approach is the main roadblock, so tighter collaboration with policymakers is needed to enable this transformation. For example, executives believe that the top-three regulatory changes required include new tariff and pricing models (84%), a greater role for distribution businesses in permitting and authorizing distributed energy resources connections (66%), and incentives for the deployment of innovative technologies on the network (64%) to develop a digitally enabled grid.

“We expect a fundamental shift of the market structure, which will include greater use of competitive markets, but utilities and distribution businesses need to push the boundaries, collaborate with regulators to innovate, and strategically invest in solutions that will support a more digital and distributed grid, providing new choices and value streams for customers,” concludes Jamison.

Comments

  1. One failing of this article is bringing in the impact of EV deployments “underneath” the Solar PV and other renewable production.

    Let’s say 1GW of solar PV is deployed. The study says this causes “grid faults” – high output, low demand.

    However, let’s say another 100,000 plug-in electric vehicles are deployed to commuters in that same country in the same year. Those commuters can create new daytime demand on the grid to the tune of.5GW of peak demand if 100,000 cars are charging at 5KW on average. If 200,000 cars are taken-up due to higher demand, then they can fully utilize the new production of the 1GW nameplate resource. And we know nameplate resource is not reliable as a production metric. Line losses and conversion loses quite a bit when it gets to the end-user.

    GTM Research says that 2016 is slated to add 16GW of solar in the USA alone. Solar PV peaks mid-day. The peak output at best will be 14-15GW across three time zones on any day for a few hours. The disruption of this may be under 10 GW of “peak power on aggregate” at the consumption points. What this disrupts is the mid-day generation needs and not the nation’s peak demand hours of 5pm-9pm. What this also means is that we will choose to “burn” 15% of the Solar resource if we end up using Battery Storage for store/release. Vendors don’t mind – this means more Solar PV module/racking sales as well as more battery sales to reach this goal.

    The aggregate product need to smooth the grid causes prices of renewables and storage to grow while decreasing the overall productivity of the renewable power produced. It surely lowers the needs for some older generation plants such as Coal-fired and brings in new demand for a more nimble natural gas tubine economy.

    What do we really need? A concerted effort to help get commuters into EVs such that they can take-up the added solar PV production of the countries that they are sold in. Germany is very slow to go with electric vehicles – mainly due to nationalism (few EVs made in Germany) and their lack of government incentives to get buyers interested. In the mean time, countries like the USA could become a far greater sales market for EVs if the myopia of the auto dealers could change such that they embrace EVs and not eschew their low-rate of service needs and high customer satisfaction ratios. Consumer education is also lacking to excite buyers.

    While we think grid storage is some “right answer” to an imbalance of new renewable deployment, the answer may be to get more EVs on the road for commuters *and* to get companies installing more and more plugs for commuters to participate in using that electricity. If a company puts up a big PV array and claims “we are green” maybe they need to be urged to install a few dozen plugs for their commuting employees so that the solar PV is consumed on-location.

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