As calls to decarbonise energy systems intensify, utilities are facing multiple challenges in ensuring their infrastructure and operations line up with the next generation business models and technologies needed to establish and manage modern grid networks.
Dan Cross-Call, a manager at Rocky Mountain Institute, said: “The grid is experiencing rapid changes in its shift to a 21st-century system; and electric utilities have a fundamental role to play in ensuring this transition strengthens resilience, improves environmental performance and protects the interests of customers while maintaining essential features of affordability and reliability.”
Trending next-generation utility business models comprise the integration of grid networks with distributed energy resources (DERs) such as solar and electric vehicles.
Similarly, technologies including blockchain and cloud computing to help consumers manage their energy usage whilst playing a role in the reliability of grid networks are becoming more mainstream.
In the US, the majority of system operators are focusing on optimising their demand side management capabilities through the rollout of innovative demand response, volt optimisation and energy efficiency measures.
Utility focus is high in securing network resilience to withstand natural disasters and ensure quick restoration of power outages. This is resulting in an increase in the deployment of technologies providing energy systems with self-healing capabilities.
Smart Energy International spoke with Bryce Evans, head of customer and partner success for Pason Power, to learn about factors impacting on utility investments in DERs and related technologies.
Utility-scale barriers exist in most markets which prevent distributed behind-the-meter storage (+ solar) to be strategically deployed and compensated for the benefit that they provide for the grid; particularly for transmission and distribution upgrade deferral.
Some of the factors restraining the expansion of DER portfolios include the capital risks associated with investing in the decentralisation of the grid assets. In utility DER projects, the investment must make sense.
DER investments must reduce OPEX, mitigate demand charges for the consumer, or be value additive by way of energy transactions.
“We need to understand energy as a geopolitical matter in which the price of energy is affected by a complex web of relationships between nations. A continued global trade war will add uncertainty, uncertainty means risk, and risk puts a damper on investment.
“The technology has to keep becoming less expensive, more efficient, and more affordable to deploy; aggressive tariffs on imported energy products could reverse historically declining technology prices, and depress growth. If the various economic incentives that have been in place to reduce the acquisition cost of solar and storage go away, like the ITC (investment tax credit), then it is also likely that growth in the market will slow.”
Growth in the utility market should also be expected to slow if RETs (renewable energy targets) set by state and local governments are scaled back or repealed entirely.
Energy storage is quickly becoming recognised as a cost-effective tool for distribution networks, yet regulations in most markets severely limit the ability for energy storage to be deployed to support the distribution network. Additionally, there are regulatory hurdles which prevent energy storage from serving multiple purposes simultaneously.
Since businesses actively seek to reduce risk, it is not unthinkable that growth will slow broadly, not just in energy. Without energy, however, business stops altogether, so it is safe to assume that the distributed energy segment will not collapse.
The cost of energy is increasing, and the growth of that expense will drive utilities and commercial and residential customers to offset those costs; a solar + storage system can do that very effectively.
Another factor is the confluence of extreme weather and an aging utility infrastructure, which means that companies and utilities will have to become energy resilient to avoid the consequences of power failures.
More generally, in the next five years storage will be a part of every solar discussion; the two belong together. Solar installers will, as a matter of course, install batteries with a growing percentage of PV systems. Utilities will follow suit, offering similar solutions to their C&I customer book.