TRENDS RESHAPING RETAIL ELECTRIC SERVICE PNUCC BOARD MEETING MARCH 9, 2018

Transcription

1 TRENDS RESHAPING RETAIL ELECTRIC SERVICE PNUCC BOARD MEETING MARCH 9, 2018

2 Threat or Opportunity?

3 Threat or Opportunity? New Technologies Want Your Customers Want Control but Not Responsibility

4 Who Owns the Narrative? Forbes FEB 11, 01:36 PM If you want a good example how bad government can kill good jobs and clean energy innovation, take a look at what s happening in Nevada, where a decision by Governor Brian Sandoval s appointees, pushed by NV Energy Inc., essentially killed the thriving local solar energy industry.... Public Utilities Commission approved a new net metering rule for people with rooftop solar systems that significantly increases monthly fees they pay their utility and significantly decreases the value of unused energy they sell back to the grid.... it will simply take too long to recoup a solar investment so that, for most, solar will no longer be a smart financial move. Solar companies are already running for the border. And if killing jobs wasn t enough,... In some cases, people who have invested tens of thousands of dollars are immediately underwater; it may take them decades to see a financial return on their investment....

5 Emerging Technologies Now Mature Decreasing costs and new business models compete with the traditional utility model: Private generation for residential and commercial customers Storage revolution Transportation electrification Third party home energy management solutions Vendors aggregate to compete with supply and/or be compensated at the retail level for grid services.

6 No Business As Usual Commercial customers are leaving the system to purchase their own supply. Technology companies expect transparency in supply and grid planning. Utilities must duplicate distributed renewables capacity unless and until it is controllable. Current rate structures to incentivize distributed energy resources have distorted the true economic value and benefits brought to the grid by increased distributed resources. As a result, some customers are making inefficient investments and are overcompensated for the services that they provide to the power system. At the same time, many more opportunities that could deliver greater value are being left untapped because of inadequate compensation MIT Energy Initiative, The Utility of the Future

7 Threat or Opportunity?

8 GR$$N vs. CLEAN September 2016 MGM is now contracting with [an] independent energy company... for the 171 megawatts consumed by its Nevada properties. The motivations for the departure were energy independence and the desire for more renewable energy, said Cindy Ortega, senior vice president and chief sustainability officer at MGM,.. We re required to do 23 percent; we re going to try to double that, Ortega said. It s going to increase, no question about it. Source: GreenTech Media, How MGM Prepared Itself to Leave Nevada s Biggest Utility June 2017 Nevada s powerful casino lobby group was a strong opponent of AB 206 [increasing Nevada s RPS to 40% by 2030], because it would have required large gaming companies, which recently paid tens of millions of dollars in exit fees to purchase power on the open market, to also meet the higher renewable energy targets. In April, Virginia Valentine, president of the Nevada Resort Association,... said, We are concerned that this bill may be too much and too soon. Source: GreenTech Media, Nevada Governor Kills Renewable Energy, Community Solar Bills with Deregulation Pending

9 Renewable Portfolio Standards (RPS) with Solar or Distributed Generation Provisions / March 2015 WA: 2 MW DG (M) OR: 20 MW PV x for PV (M) NV: 1.5% (E) x for PV (M) UT: 2.4 (M) for (E) CO: 3.0% DG x % CST x 2020 (M) MN: 1.5% (E) x % PV DG x 2020 MO: 0.3% (E) x 2021 IL: 1.5% PV x % DG x 2026 MI: (M) for (E) OH: 0.5% (E) x 2027 NH: 0.3% (E) x 2014 MA: 400 MW PV x 2020 NY: 0.58% customer - sited x 2015 PA: 0.5% PV x 2021 NJ: 4.1% (E) x 2028 DC: 2.5% (E) x 2023 DE: 3.5% PV x (M) for PV MD: 2% (E) x 2020 DC NC: 0.2% (E) x 2018 AZ: 4.5% DG x 2025 NM: 4% (E) x % DG x 2020 SC: 0.25% DG x 2021 Renewable Portfolio Standard with solar/distributed generation (DG) provision Renewable Portfolio Goal with solar/dg provision (E): Solar Electric PV: Solar Photovoltaic DG: Distributed Generation (M): Multipliers (CST): Customer - Sited Delaware allows certain fuel cell systems to qualify for the PV carve-out Solar water heating counts toward solar/dg provision 21 States + DC have an RPS with solar or DG provisions

10 Lazard s Levelized Cost of Energy 2017 Source:

11 100% Renewables ASAP (Please) Distributed generation installation on the rise Utility scale renewables cost-competitive with natural gas Putting the pieces together, the net cost of energy storage reflects (a) the increase in cost from building the storage, less (b) the fuel, fixed, and variable costs of thermal generation that storage replaces. Whether this outcome is a net cost or a net savings depends on the specific characteristics of the grid in question, and its renewable energy profile. - Michael Cembalest, J.P. Morgan Annual Energy Paper, June 2017 New renewable plants put immediate upward pressure on rates: (1) rates do not reflect the cost of carbon emissions (which renewables save); (2) rates must reflect the cost of keeping the thermal units to provide power when renewables power down Renewables subsidies (ITC/PTC) will not be available forever Natural gas cannot compete with renewables in energy market

12 Customer Perception Bring Back 15 Jun 2017 Thank you to our amazing volunteers for your tireless work over the past 18 months. Together we #broughtbacksolar!

13 Customer Expectations vs. Customer Behavior Customers are Asking Customers Want Why do new technologies impact rates? Cleaner technologies for cheaper Why doesn t the utility offer these products? Efficient services and solutions and billing How to utilize new technologies? Control and savings without responsibility Customers now face unprecedented choice regarding how they get their power and how they manage their electricity consumption regardless of whether they are aware of those choices or are acting on them today MIT Energy Initiative, The Utility of the Future

14 Customer Expectations vs. Customer Behavior With the home energy management market expected to reach $1.9 billion by 2019, the opportunity is ripe for utilities to integrate energy efficiency and demand response programs into their portfolios. According to a recent survey by Parago, only 14 percent of U.S. consumers engage in demand response programs today, but 87 percent would do so with the right incentives. The challenge utilities face is changing the nature of their relationship with residential customers to drive successful adoption of energy efficiency programs on a larger scale. What customers understand are intangibles safety, comfort, control, convenience. Utilities must address these customer needs. Source: Greenbiz, What utility customers really want in home energy management (Dec. 2, 2014)

15 Threat or Opportunity? Customer education Rate structures with visibility Demand charges Aggregation of DER by the utility Energy management Energy market Data and security R&D

16 Questions?

17 Lauren Rosenblatt Marie Steele