adaptive energy_future of electic utility

Distributed Energy, The Electric Utility Industry, And The Democratization Of

Electricity GenerationBy

Paul Evans : [email protected] : 931-952-8289

mailto:[email protected]

• Definitions

• Distributed Energy: (“DE”). Distributed Energy is energy generated or stored by a variety of small, energy generating, energy storage, grid-connected devices. Together, these devices are referred to as Distributed Energy Systems. Conventional power stations such as coal-fired, gas and nuclear powered plants, and hydroelectric dams are centralized and often require electricity for generated power to b transmitted over long distances. Distributed Energy Systems typically are decentralized, modular and utilize more flexible technologies, they typically use renewable energy sources, along with traditional diesel and NG generators and are located close to the load they serve. Local generation for local load.

• Renewable Energy: Energy from a source that is not depleted when used, such as Solar, Tidal, Wind, Biomass or Municipal Solid Waste.

• Dr. Martinot, Sr. Energy Specialist, The World Bank and his team recently compiled their Renewables Global Futures report from two years of research the report observes that "The history of energy scenarios is full of projections for renewable energy that proved too low by a factor of 10, or were achieved a decade earlier than expected.“

Renewable Energy

Paul Evans : [email protected] : 931-952-8289 2

http://en.wikipedia.org/wiki/Renewable_energy

http://www.ren21.net/REN21Activities/GlobalFuturesReport.aspx

Renewable Energy


Impact(s) On Electric Utility Industry• Recent technological and economic changes are expected to challenge and

transform the electric utility industry. These transformations arise in part to:

• An enhanced focus on DE technologies, falling costs of DE, government programs to incentivize selected technologies; the declining price of natural gas; rising electricity prices and uncertain economic conditions in certain areas of the country.

• Increasing customer, regulatory, and political interest in Demand-Side Management (DSM)


Impact(s) On Electric Utility Industry

• The financial risks created by transformative challenges result in the potential for a squeeze on profitability and, thus, credit metrics.

• Taken together, these factors are potential changers to the U.S. electric utility industry, and are likely to dramatically impact the availability of capital to fund future investment, investors, employees and customers.


Impact(s) On Electric Utility Industry

• Without fundamental changes to regulatory rules and electric utility investment recovery programs, one can speculate as to the adverse impact of these new challenges on electric utilities, and their access to capital, as well as the resulting impact on customers from a price and service perspective.

• To the extent that increased risk & investment is incurred, capital deployment and recovery mechanisms for the electric utility industry need to be adapted accordingly.


Is The Electric Utility Industry A Natural Monopoly?

• A type of monopoly that exists as a result of the high start-up costs in a particular industry. This tends to be the case in industries where fixed costs predominate, creating economies of scale where the largest supplier has an overwhelming cost advantage over competitors; as is traditionally the case in water and electricity services.”

• However, it is economically sensible to have certain Natural Monopolies, governments often regulate those in operation, ensuring that consumers get a fair deal. The electricity business has consisted of “Natural Monopolies”

• But this is no longer the case. Technological Advance has rendered the Electric Utility Industry “Natural Monopoly” obsolete.


http://en.wikipedia.org/wiki/Fixed_cost

http://en.wikipedia.org/wiki/Natural_monopoly

Blessing Of Transformative, Interesting Times• We live in privileged times. Telecommunications revolution; breakup of AT&T, mobile

communications; the Internet, -all stimulated new competition, product and service packaging, and branding - now it is Electricity Utility Transformation.

• The electricity grid already intersects with the telecommunications and information infrastructure through smart grids, meters, and telephone applications.

• Where a grid does not exist, or services are at the peripheral edge of the grid such as in rural communities, emerging economies in S.E. Asia, India or Africa, the periphery is the center - through Distributed Energy Systems.

• To characterize this new center, we consider how widely it will spread its generated power. If it encompasses neighborhoods, we have community grids; for thousands of households, we have Microgrids.


Electric Utility Transformation

• The head of America’s second-largest energy provider hopes to make the foundation of the Electric Utility Business model obsolete. David Crane, president and CEO of NRG Energy, said “customers will switch from buying power to generating their own in the form of Microgrids. There will come a day, when the grid is at best an antiquated system to a completely different way of buying electricity,”

• “Just think how shockingly stupid it is to build a 21st-century electric system based on a system of 130 million wooden poles,” “Stop trying to rearrange the deck chairs on the Titanic, and start talking about;

“What’s A Better Business Model”Paul Evans : [email protected] : 931-952-8289 9

What is A Microgrid?

• Microgrid: A group of interconnected loads and distributed energy generation with clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid and can connect and disconnect from the grid to enable it to operate in both grid-connected or island mode.



• Consider a 100,000 Deadweight tonnage container ship, a sizeablefloating microgrid. Its propulsion requires ~ 70 MW engine poweredby burning heavy fuel oil. It has power systems for cargorefrigeration; air-conditioning; critical communications systems; andother loads much like any community, likely another ~15 MW.

• Ships do not emphasize renewable energy generation, yet like anymicrogrid, they have batteries, diesel generators, and waste heatrecovery systems, optimized for cost savings and reliability.”



The promise of increased power independence and security for municipalities, communities, corporate and university campuses, hospitals and medical care facilities will drive demand for Microgrids in the U.S. Military, medical and other customers are already moving ahead to establish secure, independent power production and distribution networks on their respective campuses.

The promise of increased power independence and security for municipalities, communities, corporate and university campuses, hospitals and medical care facilities will drive demand for Microgrids in the U.S. Military, medical and other customers are already moving ahead to establish secure, independent power production and distribution networks on their respective campuses.

Reliability, Resiliency and Quality:Numerous examples of Microgrids and co-generationcapabilities keeping the “lights on” during HurricanesKatrina and Sandy exhibit the usefulness of Microgrids.NYU lights remained on during Hurricane Sandy; as didCo-Op City housing (55,000 residents); Long IslandSouth Oaks Hospital, Danbury Hospital, College of NewJersey, Stony Brook Univ., Princeton University, BergenCounty Utilities – all operated throughout Sandy.


Microgrid

Benefits of Microgrids:• Efficiency: Less distribution system loss. Local generation for

local use• Resiliency: Able to disconnect and/or repair itself much faster

than Macrogrid• Security: Enhanced cyber and physical security.• Renewable: Enhanced integration of renewable, smart grid, and

storage technologies


• From 2014 Utility Dive SurveyWhy Should Municipalities, Corp’s., Univ’s, LPC’s, Get Involved with Microgrids?


• Thierry Godart, president of Schneider Electric. “Utilities are serious about microgrids and are taking a lead in their development. The most electro-intensive and electro-sensitive utility customers are pursuing microgrids. So utilities are increasingly forced to decide “am I part of the game or just a bystander suffering from the effect?” He sees utilities taking a lead market role by forming subsidiaries that will build microgrids and eventually operate them on behalf of their large customers. At the same time, Godart noted that the more traditional side of the utility business, the regulated distributed grid — will have to adapt to the changes microgrids will bring and learn to take advantage of their benefits. Microgrids, like other forms of distributed energy, are viewed as transformative to the status quo of central power plants and transmission lines.”

• The transformation taking place in the electricity system is enormous, inevitable and in progress. The solution offers a way for utilities to remain profitable; ------ change the desired outcomes of the electricity system to include efficiency, flexibility, and clean power and pay utilities based on their ability to attain these targets.

And, Get In The Way Of The Money”

What Becomes The Role Of The Local Power Company?


• Frost & Sullivan's analysis of the emerging global microgrid market estimates that there will be a sharp rise in installations from 2015 to 2020.

• Remote community site deployments, campus environments; (healthcare, educational, military, municipal, corporate) and Microgrids deployed by utilities are going to be very active, as research activities gain pace through utility and university networks.

Emerging Economies


• Uptake of Renewable Energy Forecasts off by as much as a factor of 10

• DES, regulatory incentivized technologies and more all comprise a slow inevitable break-up of the Electric Utility Natural Monopoly

• Microgrids will play a large part in providing decentralized renewable energy, worldwide

• Local Power Company’s can be a part of the solution and potentially increase profits. They can be a part of a new transformed industry or suffer the effects of change in the status quo.

Take Aways


Thank You

Distributed Energy, The Electric Utility Industry, And The Democratization Of Electricity Generation

By

Paul Evans : [email protected] : 931-952-8289

mailto:[email protected]

adaptive energy_future of electic utility

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