By Dick Munson

For more than 100 years, the U.S. power system relied on fossil-fueled power plants to meet our growing energy demand. Now, clean energy resources like renewables are quickly changing our energy mix. But what happens when the sun isn’t shining or the wind isn’t blowing? What about when power demand momentarily outpaces supply? That’s where batteries and energy storage come in, offering a fundamental, even disruptive change to the U.S. electricity system as we know it.

Batteries are energy game-changers

Today’s electricity system not only overproduces to be prepared for unforeseen problems, it also deploys dirty “peaker” plants that fire up during those few times per year when electricity demand is high (like during a heat wave) and the electric grid is stressed. With batteries, there’s no need for either overproduction or inefficient backup reserves, ultimately saving both utilities and customers money.

Batteries can provide bursts of electricity incredibly fast, often in milliseconds, and with far quicker reaction times than traditional power plants. As a result, energy storage helps the electric grid absorb and regulate power fluctuations, providing electricity fast, when and where it’s needed. Since the supply and demand of power must be carefully balanced, this ability helps prevent the grid from experiencing brownouts or blackouts.

Batteries are also uniquely equipped to integrate the unpredictability of renewable energy by storing the unused energy produced by wind and solar. When the wind stops blowing or the sun goes behind a cloud, batteries are able to provide backup power until those resources are back online. This is good for the environment because batteries can displace the conventional generators typically used to regulate power flows, and good for customers’ electricity bills since it enables them to continue operating on self-generated power. Since intermittency is one of the strongest arguments against integrating more renewables onto our electric grid, affordable, reliable energy storage has been called the missing link to making this clean energy resource a staple in our electricity mix.

Prices are falling

Some research suggests batteries may already be competitive with conventional electricity generation. Only five years ago, they cost $1200 to $1500 per kilowatt-hour and now conventional systems sell for less than half that at $500 to $700 per kilowatt-hour. Furthermore, Navigant researcher Sam Jaffe said today’s high-quality lithium-ion batteries that can last ten years under frequent cycling are “pretty comparable” in cost to a natural-gas-fired peaker plant capable of providing four hours of energy duration.

None the less, battery prices continue to fall – and that’s a good thing if energy storage is to become truly competitive with traditional fossil fuels.

Tesla Motors, maker of electric vehicles and a huge proponent of energy storage, recently made headlines by paying Panasonic a mere $180 per kilowatt-hour. And, with the company’s recent announcement to build the world’s largest battery factory, this Gigafactory is expected to manufacture more lithium-ion batteries than the entire industry produces now, reducing the cost of batteries by almost one-third.

Even more auspicious news comes from Navigant Research, which predicts prices in the broader market will likely fall to $100 per kilowatt-hour within the next two to three years and global energy storage will rise from 538 megawatts to 20,800 megawatts – or nearly 40 times as much – in a decade.

While most analysts expect lithium ion to remain the market leader for the next decade, companies and researchers are currently exploring additional channels for energy storage, a sign that further innovation is sure to come. In a recent report on batteries, UBS noted that although the ideal battery technology is still not clear, “In the end, lower prices are coming.”

Glidepath’s ambitious battery project

Soon Northern Illinois will be home to North America’s largest battery project. Glidepath Power, a Chicago-based energy development firm, obtained financing and signed contracts for three $20-million battery facilities that will provide 60 megawatts of storage. Glidepath’s initial financing came from the Energy Foundry, an equity firm established by Illinois’ Energy Infrastructure Modernization Act, landmark 2011 legislation for which EDF advocated.

Each Glidepath facility – to be built in Joliet, McHenry, and West Chicago by spring 2015 – will consist of nine containers, which will house 80,000 lithium-based batteries. This battery development will increase the power grid’s efficiency and encourage the use of wind and solar energy.

As might be expected, the disruptive quality of batteries is causing some traditional power companies, to fight back. Commonwealth Edison, one of Illinois’ largest utilities, for instance, recently filed a tariff with the Federal Energy Regulatory Commission (FERC) that would impose a monthly fee on battery installations, possibly setting a precedent for hindering battery projects like Glidepath’s.

As our electric grid becomes smarter, batteries and energy storage will continue to play an increasingly disruptive role in our power supply system. Someday – perhaps not too far off – projects like Glidepath’s battery facilities will be commonplace and a grid powered entirely by a combination of renewable sources and batteries will be a reality.

By Dick Munson

Source: pgegreenenergy

A new utility business model – “Utility 2.0” or “reform” – is the hot topic in statehouses and regulatory commissions across the country. This is due to many factors: technological innovations in the energy sector, changing consumer expectations, increasing electricity prices, tighter regulations, and the need to decarbonize our energy sector as we grapple with climate change.

Some argue utility earnings should be based on performance rather than volumetric electricity sales. They suggest utilities’ monopoly interests should be aligned with enabling clean energy services – such as on-site renewable energy and home energy management – instead of simply delivering more electricity.

Key to this new approach is the ability to define – and then measure – performance. This will require a set of metrics by which utility investments can be judged and rewarded. Illinois was the early adaptor of performance-based metrics for its historic smart meters roll-out and is finalizing a set of metrics this week that are critical to designing a utility business model for the future.

Calculating the benefits of smart meters

Two years ago Environmental Defense Fund (EDF) and Citizens Utility Board (CUB) negotiated some 20 environmental and economic metrics to judge the progress of Illinois’ largest utilities’ (ComEd and Ameren) advanced meter infrastructure. This week, EDF and CUB will ask the Illinois Commerce Commission to embrace their final metric outlining how to calculate the greenhouse gas reductions associated with the utilities’ investments in smart meters. This proposal describes how to track emission cutbacks associated with shifting energy use to different times of day (load shifting), reductions in system-wide electricity use, and reduced use of meter-reading vehicles.

The groups and utilities held workshops over the past year to identify the best approach to achieve these measures in Illinois, including strategies for better data collection. As a result, the new proposal calculates the emissions savings due to load shifting for smart meter customers (versus non-smart meter customers) on an hourly basis.

The measurement evaluates the variable carbon value of a kilowatt-hour (kWh). A kWh saved during an hour of high-carbon intensity, when power is generated from coal, is worth more (carbon-wise) than a kWh saved when our power is mostly coming from renewables and nuclear. Similarly, a reduction in peak demand that avoids the need for dirty “peaker” plants creates a system-wide environmental benefit.

The metric also calls for evaluating operational benefits, such as the reduced use of meter-reading vehicles.  By being able to check a meter remotely, a utility avoids sending people to read the device, thus saving both money and gasoline.

Tracking greenhouse gases is key to “Utility 2.0” 

Being able to measure the environmental benefits of clean energy investments like smart meters is critical to designing a utility business model for the 21st century. It will incent utilities to make similar investments as they search for new ways to meet state and federal environmental regulations, like the Clean Power Plan. And as technologically savvy customers continue to demand greater control and oversight over their electricity use, sharing this data with customers will improve the value of utility-customer relationships.

While entrepreneurs continue to bring innovation to electricity markets in the form of smart appliances, electric vehicles, and affordable, on-site renewable energy generation, utility managers of the grid need new business models that reward performance and efficiency, at least in the short term. Such models, however, depend upon metrics that can identify and measure performance goals that matter.

By Dick Munson

Source: Alex Rumford

Energy data collected via smart meters could lead to services that improve people’s lives and cut harmful carbon pollution. This is true if customers have easy access to the energy data they need to control their own energy use and reduce their electricity bills – which isn’t always the case.

When the Illinois General Assembly passed the Energy Infrastructure Modernization Act in 2011, local utilities ComEd and Ameren touted their many benefits, including greater control over peak energy load, electric grid resiliency, and cost savings resulting from the energy conservation efforts of their electricity customers. Now that smart meter deployments are well underway, utilities need to enable the many benefits of smart meters by empowering customers with easy access to their own energy data.

To facilitate this endeavor, EDF and Citizens Utility Board (CUB) joined forces to develop the Open Data Access Framework, a first-of-its-kind proposal, which the groups presented to the Illinois Commerce Commission (ICC) on Friday, August 15th.

Knowledge is power

The Framework sets a minimum state regulatory standard to ensure consumers can quickly obtain smart meter data in convenient forms, either directly from the meter or through the internet, a web portal, or mobile applications. This data includes insight for customers into their electricity consumption – how much are they using and when – and could help unlock new third-party businesses and services to help consumers better understand and manage their home energy use.  Combined with smart thermostats and other smart appliances, this new framework has the power to transform Illinois’ electricity system.

The framework declares:

• The customer as the principal owner of home energy consumption data, and the utility as the guardian of such data
• Customers should have access to their electricity consumption data – in machine-readable formats – in as short intervals as possible, with 15-minute intervals recommended, but never in intervals greater than one-hour
• Utilities should provide data as quickly as possible to customers – real-time if accessed directly from the smart meter, or within an hour if through the internet

Unlocking energy data

This new standard could make Illinois the first state that requires utilities to adopt, at a minimum, a national standard data access protocol, such as Green Button Connect.

Green Button was developed by the energy industry as a national voluntary standard to ensure consumers have timely access to their own energy data in consumer-friendly and computer-friendly formats. The first iteration, Green Button Download, provided a common standard for customers to “click a button” and download smart meter data from a utility website. The next voluntary standard, Green Button Connect, has been adopted by a handful of utilities and allows customers to request their meter data be shared directly with a third-party software or hardware provider in order to present it to them in new and unique ways. Green Button builds on policy objectives laid out in the Obama Administration's Blueprint for a Secure Energy Future and Policy Framework for the 21st Century Grid.

Access to this kind of data is a key precursor for an ambitious agenda that promotes investments in demand response, energy efficiency, and clean distributed generation. EDF and CUB hope the Open Data Access Framework will provide guidance to public utility commissions throughout the country on how to set a standard for customer access to their own data, and create a consistent, national regulatory model to enable third-party software and hardware providers to scale to all markets.

The future of real-time, automated and interactive energy technologies is here – all we have to do is unlock the data.

By Dick Munson

Chris Prandoni certainly is welcome to his own opinions, but not his own facts. As the Director of Energy and Environmental Policy at Americans for Tax Reform, Prandoni may favor coal-fired power plants and dislike energy efficiency and renewables, but there’s no doubt Ohio’s clean energy standards are saving consumers money and bringing huge investments into the state.

Prandoni supports S.B. 310, which has already passed the Ohio Senate and is expected to enter the House within the next week, and promises to kill the state’s renewable portfolio standards (RPS) and energy efficiency directives. If Prandoni has his way, and as he points out in his misinformed Forbes op-ed, Ohio would be the first state in the nation to “pare back” its clean energy mandates, but this is not something Ohioans should be proud of.

Despite Prandoni’s claim, the fact is Ohio utilities admit the clean energy standards are saving money. In filings to the Public Utilities Commission of Ohio (PUCO), the power companies admit energy efficiency programs alone have netted Ohio consumers more than $1 billion in savings to date, and will result in more than $4.1 billion in savings over the program’s life.

Ohio utility American Energy Power (AEP) argued energy efficiency “is an important resource for the state of Ohio, AEP Ohio, and its customers, continuing to be important as future fuel and commodity prices remain volatile and environmental regulations become more stringent.”  Even First Energy, the leading proponent of S.B. 310, admitted that for every $1 spent on energy efficiency programs, its customers save over $2.

The standards, in fact, are advancing competition and providing consumers with choices about what forms of energy they can purchase. What Prandoni and S.B. 310 advocates are doing is strangling that competition and choice.

They also are hurting Ohio consumers. According to calculations by professors at Ohio State University (OSU), the proposed scuttling of the state’s clean energy laws would force the average Ohio family to pay over $500 more on their electricity charges, and the average business would pay an additional $3,000 annually.

The passage of S.B. 310, moreover, would stall the state’s economic development. OSU also found that existing clean energy laws have helped 400 companies grow and employ 25,000 Ohioans. The standards have attracted more than a billion dollars of private-sector investment, helping make the Buckeye State the nation’s leader in wind-related manufacturing.

Governor John Kasich has taken great pride in his clean energy leadership. The website JobsOhio, the governor’s privatized economic development agent, boasts: “Ohio ranks No. 1 in the nation for renewable and advanced energy, bringing in more renewable energy facilities than any other state.” It further declares, “Ohio is committed to leading the world to energy independence with advanced energy innovation, groundbreaking manufacturing processes and low-cost deployment of these assets to fulfill current and future demand for alternative energy solutions.”

The standards enjoy support from many of the state’s leading companies – including Honda, Johnson Controls, Schneider Electric , Whirlpool, United Technologies, and Owens Corning – who are speaking out against S.B. 310. Employing more than 30,000 workers, the firms stated, “We believe that policies promoting efficiency should continue to be a part of Ohio’s plan to attract economic investment and encourage growth.” S.B. 310, they said, “would negatively impact programs local utilities run to trim energy consumption, and help stabilize the state’s electricity grid and prices.” The clean energy standards, the companies argued, “provide business prospects and jobs for contractors across the Buckeye State,” and such policies are “a low-cost strategy for keeping utility costs under control and providing protection against price volatility, which enhances competitiveness for our companies.”

Even the Ohio Manufacturers Association supports the clean energy standards, arguing that the falling prices of wind energy and solar collectors, along with energy efficiency, make clean power the most cost-effective way to meet the state’s energy needs.

The religious and evangelical communities also have been supportive. A recent letter from all Ohio Bishops, stated, “We ask you to prayerfully consider if it would be more prudent for the sake of environmental stewardship to maintain our current policies and not freeze these standards.”

This broad coalition knows the facts – Ohio’s clean energy standards are working and S.B. 310 would hurt the state’s businesses, workers, and consumers.

This commentary originally appeared on Forbes.

By Dick Munson

Source: S. Sepp, Wikimedia Commons

Competition from new players will drive innovation in the changing electric utility market

The blogosphere is abuzz with plans to create a new electric utility business model, one that reduces energy costs and pollution. The power company of the future, many experts say, will feature new electricity rate structures that reward efficiency, finance and integrate local, on-site power generation (like rooftop solar), and put more smart meters in the system to help us better understand and control our energy use.

Such changes could indeed help reduce consumer costs and pollution, yet they ignore larger opportunities to advance innovation and efficiency. Missing in most Utility 2.0 discussions is any real debate about the emerging electricity-services market, filled with hundreds of innovative entrepreneurs who want to profitably provide consumer services that revolutionize how we use and interact with electricity. Instead, most experts simply assume the monopoly structure of the past several decades will continue. The introduction of new players into the electricity market, however, challenges that assumption.

Regulated-monopoly paradigm is being challenged

A little history could be useful. Thomas Edison launched the electricity business by arguing for competition, something he said led to creativity. His personal secretary, Samuel Insull, had a different vision, moved to Chicago, began buying up power companies, and led a campaign to allow his integrated firm to obtain a geographic monopoly in exchange for state regulation of his rates.

Competition, said Insull, was destructive, at least for his profits. The regulated monopoly structure – complete with guaranteed profits and relief from failure – worked well for several decades, helping to provide universal electrification for homes and businesses. The model has been so strong that even the deregulation efforts of recent decades did little to challenge the regulated-monopoly paradigm as holding companies in many states continued to control both the generation and distribution of power.

Today’s electricity market, however, is changing more fundamentally, and most industry participants don’t recognize it. New and deep-pocketed players – including Google, Comcast and Walmart – are entering the industry and offering an array of consumer products that integrate electricity, security, and networking. Technology breakthroughs and economies of scale have substantially reduced costs for natural gas, small-scale renewable energy projects, and batteries. These advances are also allowing people (and entrepreneurs wanting to serve them) to obtain real-time information about their energy usage and options.

Yet even some Utility 2.0 advocates continue to argue that electricity is a special commodity – one whose supply must instantaneously meet demand – and must be controlled by a monopoly. The grid, they say, is a wonderful machine that cannot face competition. Some experts focus only on how regulators can help investor-owned utilities increase their earnings opportunities in ways that improve efficiency and distributed generation. Yet this powerful alliance – of utilities themselves, regulators, as well as the environmental and consumer advocates used to appealing to regulators for reform – is ignoring the whirlwind of activity within emerging energy-service markets; a whirlwind that challenges the very concept of power monopolies.

Competition is good for innovation

Thomas Edison, in fact, would be appalled by the lack of innovation within today’s utility monopolies, many of which bear his name. During an era of remarkable technological revolutions, electricity generators in the U.S. have not increased their average efficiency by a single percentage point in over 50 years! Part of the problem results from the very nature of the regulated-monopoly business model, whose guaranteed profits and protection from failure discourage risk and creativity.

Edison believed profits were to be earned and business failures led to advances. Rather than simply sell electricity or kilowatt-hours, he also wanted to provide services, such as lighting so people could read at night and heat so they stayed warm during the winter. Edison would welcome the multitude of new firms wanting to provide an array of such services.

Consider, for instance, the thermostat in your home. That relatively simple device is becoming smart, and numerous companies see opportunities to make money by using it to control a home’s operating system. Lowe’s, the hardware supplier, provides thermostats that also offer a front-door keypad and door-opening sensors that can be controlled by an app. ADT Corp., the home-protection firm, sees the modern thermostat as key to an integrated system providing security, networking, and temperature control – all done by self-adjusting or pre-programmed devices that relieve homeowners of the need for constant modifications.

And then there’s Google, which spent $3.2 billion – twice what it paid for YouTube – to buy Nest, which may be a thermostat and smoke detector designer today, but could offer the systems that control a smart home’s appliances, locks, lights, and Internet. The real innovation and profit opportunities, of course, may come from the hundreds of entrepreneurial firms that are not yet household names but see profits in an electricity market that has been controlled by risk-adverse monopolies.

Batteries also are disrupting the regulated-utility paradigm. Being able to store electricity destroys the very basis for a monopoly controlling power supply and demand. Most attention has been paid to Tesla, which recently announced plans to build a $5-billion “gigafactory” that would double the world’s lithium-battery production and reduce battery costs by 30 percent. Since the Tesla battery should be capable of storing enough electricity to power a home for 3.5 days, it could eliminate the need for solar-panel users to stay connected to the grid, and it could convert thousands of vehicles into electricity generators.

Not to be outdone, General Motors is investing almost $450 million to upgrade its own battery assembly plants to allow its Volt to drive more than 200 miles on a charge. Even appliance manufacturers are inserting batteries into their refrigerators, allowing people protection from blackouts as well as access to energy sources like solar and wind, which are most abundant during the late afternoon and evening respectively.

Similar innovation and business competition are occurring with meters, sensors, and the processing of the enormous amount of data that comes from those devices for the benefit of consumers. Scores of entrepreneurs are providing apps that help homeowners and renters reduce their energy costs – and, coincidently, reduce their pollution.

The move to competition doesn’t portend the end of regulation since power generators will continue to need to meet environmental and safety standards. What the advent of new players does bring is innovation and efficiency. With so many new businesses opportunities, the future of energy markets is not clear … and that’s exciting.

The utility-of-the-future discussions are timely since nearly every single power plant operating today will be replaced by the middle of this century, offering what one utility executive called a “blank sheet of paper” that enables a major transformation of the U.S. energy system. Yet the Utility 2.0 discussions need to expand and focus on the most exciting change – the introduction of hundreds of innovative companies that want to profitably provide consumer services that used to be controlled by a monopoly. Utilities and environmentalists alike should embrace their arrival and help remove the barriers to competition.

This commentary originally appeared on Smart Grid News.

By Dick Munson

Source: Dustin M. Ramsey

Ohio’s clean energy agenda has taken many hits in the past, particularly from the American Legislative Exchange Council (ALEC), a front group and model bill factory for many corporate interests including oil, gas, and coal. Last year, ALEC led an unsuccessful effort to repeal the state’s clean energy standard. The introduction of Ohio’s Senate Bill 310 is the group’s most recent attempt to prevent Ohioans from continuing to enjoy the many benefits of new, clean energy technologies, reasonable electricity rates, and a healthy environment.

Hearings began last week on SB 310, which would freeze any additional energy efficiency or renewable energy mandates in Ohio after 2014. This is an amendment to the landmark 2008 legislation in Ohio requiring the state to acquire 12.5percent of its energy portfolio from renewables and to reduce energy consumption by 22 percent through energy efficiency measures by 2025. If adopted, this freeze would stymie Ohio from reaching its full clean energy potential, attaining instead only about one-tenth of its 2025 renewables goal and one-fifth of its energy efficiency target.

Over the past six years, thanks to the 2008 clean energy legislation, Ohio has emerged as a national leader in clean energy. Ohio experienced record investments and economic growth in clean energy between 2010 and 2011, and has continued to become the nation’s third leading state in producing energy efficiency equipment.  The 2008 clean energy standards have also breathed new life into the state’s manufacturing industry, and Ohio is now the top state in wind-related manufacturing facilities. These standards support over 25,000 Ohio jobs, saved consumers over $1 billion on electricity bills, and drastically slashed Ohio’s toxic air pollutants.

While said to be a “temporary stop,” the new legislation dismantles Ohio’s clean energy efforts. Unfortunately, the state has faced consistent introduction of anti-clean energy legislation since 2012 with no real end in sight. With backing from powerful industry leaders and campaign funding from deep pockets, including the Koch brothers, opponents of clean energy in Ohio seem to be in it for the long haul.

That’s why EDF has created an action alert to help concerned Ohio citizens protect the state’s job-creating, clean energy economy. Join the majority who support clean energy by adding your name and telling the Governor, State Senators, and State Representatives to put Ohioan’s health, economy, and environment first. Don’t let Ohio lose out on these crucial clean energy standards.

By Dick Munson

In a victory for Illinois residents and the environment, Commonwealth Edison Company (ComEd) today formally proposed to the Illinois Commerce Commission an accelerated timetable for completing its deployment of four million smart meters. ComEd began installing smart meters last fall as part of the Energy Infrastructure and Modernization Act of 2011. With this proposal, the Illinois utility will complete its meter installation almost five years earlier than planned.

Modern, smart electricity meters are a key component of the smart grid. These devices help eliminate huge waste in the energy system, reduce overall and peak energy demand, and spur the adoption of clean, low-carbon energy resources, including wind and solar power. By enabling two-way, real-time communication, smart meters give every day energy users, small businesses, manufacturers, and farmers (and the electricity providers that serve them) the information they need to control their own energy use and reduce their electricity costs.

“Faster deployment of the smart grid makes economic sense for Illinois consumers,” said David Kolata, Citizen’s Utility Board’s (CUB) Executive Director. “Not only will it lower overall implementation costs through economies of scale, but it will also allow consumers to more quickly access smart grid benefits, including improved reliability, better energy efficiency, and new, money-saving power pricing programs.”

Critical work, however, lies ahead. For instance, EDF has negotiated with ComEd a set of 20 metrics that will be used to evaluate the consumer, economic, and environmental benefits associated with the smart grid. This will help ensure that the deployment of this new technology benefits more than the utility’s bottom line. As the saying goes, what gets measured gets done.

We also are working to set standards for providing customers with their energy-use data as close to real-time as possible so that they can become more active participants in their own energy consumption. Additionally, EDF and our Illinois partners are pushing to advance dynamic pricing adoption, through more sophisticated electricity pricing structures based on the time electricity is used. Such pricing alternatives could help Illinois customers reduce their energy use during periods when costs – and environmental impacts – are high.

“New technologies and business models are emerging every day to enable residents to conserve electricity, save money, and reduce pollution,” said Andrew Barbeau, president of The Accelerate Group, who is working with EDF in Illinois to advance effective smart grid implementation. “Achieving a critical mass of customers with meters sooner will enable Illinois to be a leader of the pack in implementing solutions for smart and connected homes and communities.”

The speed-up still needs to be approved by the Illinois Commerce Commission, but it is an important first step in what EDF sees as a path toward a smarter, cleaner, and healthier energy system for all Illinoisans. Stay tuned.