How disruptive does disruptive change in the energy system need to be to save our planet?

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Adele McKinney
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1 How disruptive does disruptive change in the energy system need to be to save our planet? Gary Radloff Director of Midwest Energy Policy Analysis University of Wisconsin-Madison April 25, 2015

2 Wisconsin Energy Institute Faculty Seven Labs Five Affiliated Labs 6 Affiliated Consortia $110 M of UWResearch

3 Distributed Energy Resources are causing change in the energy system? New technologies (DERs) and energy services Market growth of clean energy solutions Cheaper prices for wind and solar energy New supply and demand balance Advent of energy storage (changes dispatch for intermittent clean energy) PV+storage market? Continuous opportunity for negawatts= energy efficiency (flexiwatts=demand response) Prosumers/microgrids/transactive energy

5 Can We Invent Our Way Out of Climate Change? We are advancing the theme that energy technology innovation, and the resultant cost reductions in energy technology, are ultimately the key to meeting our climate challenges, DOE Secretary Ernest Moniz at the Carnegie Endowment for International Peace (11/15)

6 Utilities Today Do Not Equal Innovation Utilities are large organizations with enormous sunk costs and years of bureaucratic inertia, overwhelmingly focused on reliability, with returns protected by law and every move watched by regulators. This is not a recipe for entrepreneurial spirit. (David Roberts/Vox)

7 Coal, Oil, and Natural Gas Carbon Intensity (LCA) Source IPCC

8 Power Sector Carbon Emissions are Declining Now (EIA) future?

9 Capacity Additions 2015 (Wind, NG & Solar = 96%) (APPA)

10 Electric Generation Capacity Additions

11 U.S. Electric Energy Generation (Capacity by Fuel Type)(American Public Power Association)

12 Conclusion We can only save our planet with disruptive social change, new energy technologies, disruptive new energy business models, and significant regulatory changes to empower markets. Therefore, yes, we need disruptive change in the U.S. energy system.

14 Utilities have little to no incentive to invest in research and development today Electric utilities on average only spend about 0.1 percent to total revenues on research and development (R&D). Biomedical, electronics, and semiconductor industries in the U.S. reinvest about 20 percent of revenues in R&D. Read more about energy innovation in Foreign Affairs article, The Clean Energy Revolution :

15 Utility Fork in the Road (source RMI)

16 States Leading the Charge: New York New Yorks Renewing the Energy Vision (REV) Initiative. See NY PUC Case No. 14-M-0101 proceeding. Department of Public Service Staff white paper from Jan on NY Clean Energy Standard (Case 15-E-0302) 01/25/16 NYSERDA Microgrid Pilots and Studies

17 NY REV Market Change v. Status Quo (Source: Guiliani Center, NYU Law, GTM Research)

18 States Leading the Charge: California

20 Transactive Energy Transactive energy is a system of economic and control mechanisms that allows the dynamic balance of supply and demand across the entire electrical infrastructure using value as a key operational parameter. The term transactive energy is now being applied to the growth of DER as a reference to techniques for managing the generation, consumption or flow of electric power within an electric power system through the use of economic or market based constructs while considering grid reliability constraints, according to the DOE-formed industry group, the Gridwise Architecture Council.

21 Stages of Transactive Energy Adoption for Industry (source: GridWise Council)

22 Transactive Energy Stakeholders (Source: GridWise Council)

23 Network Integrator model

24 Energy Company 2.0. artisanal locally-raised electrons How far away is the Uber of energy? Artisanal locally-raised electrons quote from (Paul Brody of Ernest & Young on The Energy Gang podcast 04/12/16) Consider: Yeloha partnership with Green Mountain Power in Vermont with local peer-to-peer solar energy sharing. Sonnebatterie in Germany formed new company called (sonnecommunity) marketing solar panels, energy storage systems, and digital software platform that monitors real-time energy usage and weather conditions to balance local supply and demand. Vandebron in the Netherlands has 38,000 subscribers linked with DER technologies and a market exchange mechanism. Blockchain technologies being used by LO3 Energy for a community microgrid in Brooklyn, NY with peer-to-peer trading mechanism.

25 Contact Information Gary Radloff Wisconsin Energy Institute University of Wisconsin-Madison

27 Energy Efficiency Cheapest Option (beats building new plants) (AEEE/Lazards)

28 Levelized Cost of EE Savings Continues to Grow

29 Operable Utility-Scale Generating Units US (Dec. 2015)

30 Elements of Transactive Energy (Source: GridWise Council)

31 U.S. Capacity Additions by Fuel (APPA)

32 A New Model for Regulators Instead of command and control authority now used by a majority of the state s Public Utility Commissions (PUCs) we need policies that ensure: Total transparency on transactive energy markets; (blockchain technology?) Optimization of the market for producer and consumer (Prosumer) Contracts for the right to sell (into energy markets) and responsibility to provide demonstration that you are capable of (through equipment, generation capacity and/or storage providing XX energy to the market when called. Provide low cost conflict resolution Authority to govern resources at multiple levels Adaptability to unknown and changing conditions; including new technology change Enabling coordination of distributed and individual plans and actions Enabling for agents (nodes and functional cluster organizing with potential partnerships for aggregator) of services and power delivery Reducing transaction costs that are barriers to market entry and continued participation Sources for above include: Elinor Ostrom (1990) Governing the Commons Lynne Kiesling Regulation s Effect on Experimentation in Retail Electricity Markets Public Utility

33 Ideas Ideas: Transitional Policies such as performance-based incentives and/or performance based rates Require all utilities to organize as benefit corporations (B-Corps) to return to the original concept of a public utility in order to participate in transactive energy markets. Long-term societal sustainability policies too?

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