Renewables are Here: Utilities Ignore at Own Risk

October 10, 2017

Above, Michael Bloomberg points out that, regardless of the current, and I predict, short lived, neglect of renewable energy by the federal government, technological change and recognition of climate challenges by major corporations and municipalities continues to drive a paradigm shift in technology, one which the nation’s utilities ignore at their peril.

Utility Dive:

Accelerating growth forecasts for electric vehicles have energy analysts urging utilities to start planning for their impacts on the grid today.

By 2021, Bloomberg New Energy Finance (BNEF) forecasts U.S. electric vehicle (EV) sales could reach 800,000 annually. By 2025, the Edison Electric Institute, a utility trade group, estimates there could be 7 million zero-emission vehicles on U.S. roads.

“EV sales in the U.S. have been growing at a compound annual growth rate of 32% for the past four years,” said Chris Nelder, electricity practice manager at the Rocky Mountain Institute (RMI). “2017 monthly sales data suggest that rate is accelerating. Under some reasonable assumptions, there could be 2.9 million EVs on the road in the U.S. within five years.”

That many EVs could add “over 11,000 GWh of new load to the U.S. power grid,” said Nelder, co-author of RMI’s new report, “From Gas To Grid: Building Charging Infrastructure To Power Electric Vehicle Demand.”

EVs are only 1% of total vehicles sales today, “but 11,000 GWh of load is about $1.5 billion in annual electricity sales that utilities may need to accommodate within their current planning horizons,” Nelder said. “Are utilities and system operators ready for that?”

Failing to prepare for EV growth with grid upgrades and rate design reforms could leave utilities “flat footed” when this new load materializes, Nelder said. But if utilities reform their rate designs and infrastructure planning to account for EV growth, they could spur more deployment than than the most optimistic of forecasts and deliver savings even to customers who don’t own the cars themselves.

Ratepayer benefits of EVs

The pressure to prepare for EV growth is felt by many in the power sector, said Bill Boyce, electric transformation supervisor for the Sacramento Municipal Utility District (SMUD).

The BNEF forecast shifted the attitude of the utility industry and marketplace “from ‘if’ to ‘how soon’” EVs would come to dominate, he said.

Using the BNEF numbers, the RMI paper reports U.S. EV sales will be 500,000 in 2020, just over 1,000,000 in 2022, and 2,000,000 in 2025. Growth will accelerate because “an EV is a good investment,” Nelder said.


Yale Environment 360:

The truth is that the combat analogy is misleading. Some utilities do actively oppose rooftop solar. But others have been immobilized by the ongoing paradigm shift toward clean, renewable energy. And a few utilities — most notably, in New York, California, Hawaii, and Minnesota — are taking tantalizing first steps into the new realm of distributed, or decentralized, electricity generation.

“The broad characterization of all utilities acting monolithically is highly unfair, highly unsophisticated,” said Tanuj Deora, executive vice president at the Smart Electric Power Alliance, whose members are utilities learning to navigate the renewable energy arena. Most utilities are moving slowly, he says, “not because they have some hatred for rooftop solar,” but because the task of adjusting to the coming renewable energy era is profoundly complex.
Both utilities and their regulators have been slow to recognize the tidal wave coming at them. For more than a century, utilities had learned how to send electrons in one direction, usually safely and reliably, from large, centralized fossil fuel and nuclear power plants over transmission and distribution lines to businesses and homes.

Now, abruptly, their networks are being asked to accommodate electrons flowing in two directions, to and from consumers, without compromising safety and reliability, as a new generation of electronic devices enters the market. These “distributed energy resources,” or DERs, can be stationed in or near homes and businesses. They include not just rooftop solar, but wind power, batteries, electric vehicles, smart meters, smart water heaters, smart thermostats, on and on. They promise not just emission-free, fuel-less electricity, but far greater energy efficiency, thus reducing consumer costs and environmental damage. Their expanding use increasingly will determine how the grid functions.

While the shift to rooftop solar and other distributed energy sources presents a major technological challenge to utilities, their current business models provide them no incentive to meet it. According to the models, utilities are allowed to use ratepayer revenue only to reimburse themselves for the costs of operating the grid. Profits accrue to them as a designated percentage— usually 7 to 10 percent— of their capital expenditures on infrastructure investments, from new plants to new transmission lines.

Rooftop solar is in the vanguard of DERs that promise to upend this business model. Not only do rooftop solar and other DERs divert customers from the utilities, these innovations defer infrastructure expansion by producing decentralized, renewable energy or by improving energy efficiency, thereby threatening utility profits.

And as more and more customers install solar panels, utilities earn less and less revenue, which means that rates for remaining customers must increase — which drives even more of them to rooftop solar. As battery storage becomes cheaper, some customers will be tempted to leave the grid entirely.  A paper published by the Edison Electric Institute in 2013 famously warned of this vicious circle, giving rise to the expression “utility death spiral.”

Hemmed in by their business model and regulators who expect adherence to it, many utilities have concluded that they have only one alternative: stop rooftop solar. In this battle, utilities have sometimes behaved oafishly, sabotaging themselves.


That is a phenomenal share of 47.8% of the state’s electricity demand being met by rooftop solar (compares with 36% in the previous record last week) and is clearly a record for South Australia, and for that matter in any large grid anywhere in the world.

As we reported last week, the tumbling records confirm that the times of record low demand have shifted from the night to the middle of the day.

The Australian Energy Market Operator has predicted that by 2019, record low demand may fall to just 354 MW, and within 10 years the grid demand may fall to zero because of the increasing amount of rooftop solar. This is also likely to occur in Western Australia around the same time.

South Australia is the first region where rooftop solar PV has caused a shift in minimum demand from night time to the middle of the day (most states still have electric hot water being switched on at night, when it would make sense to use the “solar sponge” as Queensland has suggested).

The impact of rooftop solar is being felt in prices – look at the black line th


7 Responses to “Renewables are Here: Utilities Ignore at Own Risk”

  1. The average automobile travels 37 miles/day in the U.S.. A solar array the size of a one car garage or single parking space can provide more than enough energy daily to power an EV while saving 4 1/2 tons of CO2 annually – 6 times the amount saved if charged by the inefficient steam electric monopoly.

  2. If you’d stop promoting ugly, sprawling wind power in the generic category of “clean energy” these posts would be a lot more cogent.

    Violating the environmental tenets of treading lightly and maintaining a small footprint removes wind power from the green category. It’s just too big and sprawling, and will only get more so. There’s a large aesthetic gap between different types of renewable power, and the word “renewable” generally ignores the fossil fuel production factor in all infrastructure.

    PNAS just released a study hyping the future industrialization of our oceans with untold numbers of large wind turbines (600-700 feet or taller) echoing the 2009 Jacobson/Stanford scheme for 3.8 MILLION of them with little concern for what that would do to nature. It’s been hard to get many offshore projects built (e.g. off the UK and America) because many people still care about natural scenery and the historical sense of place.

    The first U.S. offshore wind factory is easily visible from Rhode Island, and others will be similar, so it’s nonsense that they can eliminate onshore blight. Offshore wind turbines will likely never be out of sight of land, and will cause even more interference with bird flyways and shipping lanes. Installing and maintaining them is no picnic, either. You can’t just summon a utility truck and climb those monsters when something goes wrong. They also leak oil and when the nacelles catch fire, all kinds of junk is rained down. Marine environments are bad for mechanical devices.

    The people hyping wind energy usually argue that ocean junk like plastic and shore debris is a menace, yet they want to increase man-made artifacts in the ocean to extreme levels with high visibility. It takes a lot of spin to call that green. You can barely see the Pacific garbage gyre (not downplaying its seriousness) but today’s environmentalists cherry-pick what they consider OK or not OK, with callous disregard for this new lost scenery, always changing the subject to older coal and oil blight. The mere fact that people are getting subsidized electricity does not determine environmental progress.

    The current number of wind turbines (over 250,000) is not even providing 1% of the global energy supply per several studies. Electricity alone can’t run modern societies for heavy industry and transport. Even if the world was spiked with millions of ugly wind turbines it’s doubtful they’d contribute more than 5% to pragmatic total energy use, at a very high aesthetic cost. Also keep in mind that the population keeps growing and the energy benchmark is rising as more people try to modernize.

    P.S. If I don’t reply to comments, it’s because they’re always the same canned diversions, like “would you rather live near a coal mine?” (far more people see wind turbines now) and “cats are killing more birds” (wind power kills different species and will kill more as it grows, plus more bats are now killed by wind turbines than anything else man-made). Wind-defenders are blind to those facts and push a narrow type of environmentalism that sacrifices the bulk of nature for people-centered climate concerns. Good podcast on that topic:

    • With respect.
      What is your solution. ?
      I guarantee within a dozen years even you will start asking why wasn’t something done to prevent or minimise this.

      Clean coal
      Very expensive and not a major reduction in CO2, plus what do you do with the toxic sludge and fly ash.
      All those storage lakes are a danger in themselves

      Coal gas
      major reduction in CO2
      Relatively expensive and with a massive toxic waste issue

      Including Thorium which has some nasty precursors
      Toxic waste
      Time taken to build – starting now 10 years to come on line

      That toxic waste is an additional existential threat to our only biosphere

      The factor that magnifies all the risks of the above is the geological volcanic one

      The geological and Paleo record shows periods of greatly increased volcanic and geological activity at ice age transitions as the ice sheets melt and after

      Due to melting ice sheets and glaciers the Earths rotational axis is moving
      this is being modulated by the weight of intense rain events.

      Harvey depressed the Earth surface around Houston by 2 cm, it was noted an increase in earthquake activity on the other side of the plate, coincidentally followed by the Mexican quakes in the geologically near vicinity, these were not at plate boundaries and the last one no where near a fault even.

      So just saying, any nuclear option carries with it risks we cannot anticipate, not to mention the long term security stability of those toxic sludge storages.

      Your suggested solutions are welcome, but all factors must be taken into account including Volcanic winter that would put the LIA to shame, caused by the consequences of AGW

    • redskylite Says:

      Talk about off-topic, this post barely mentions wind, it just emphasizes the need to change. Most forms of electric producing technologies have down sides, you are obviously wind-phobic. The point is we need to get of carbon producing technologies using the tool-set of available non carbon methods, of which wind is just one choice.

      You could choose to moan about any of the other technologies, but the fact is populations require electricity, and it is clear we should not use the old nineteenth and twentieth century methods as they are truly f***king up the carbon balance with critical repercussions.

      So stop moaning and get positive, what do you suggest, we use and where. ? Do include fossil fuel please, they have had their day, and belong in history books.

      I’ve worked in oil fields and lived next to a nuclear power station – they weren’t places of beauty and had huge footprints too.

      You say you don’t read replies, fine then I won’t bother reading any of your other nonsensical whingeing.

    • Gingerbaker Says:

      ” It’s been hard to get many offshore projects built (e.g. off the UK and America) because many people still care about natural scenery and the historical sense of place.”

      Oh, sure. Nothing to do with corruption due to oil interests. You are full of shit “respect Silence”.

      You are a troll. An anti-wind troll with an agenda. Who pays your meal ticket, I wonder.

    • toby52 Says:

      My daughter lives in a restored farmhouse in the West of Ireland, among some of the most beautiful scenery in the world (IMHO). Poking up over a row of hills nearby we can see the tops of massive wind turbines, about a dozen.

      Do we hate ’em? No, we love ’em. We think they are like big, friendly giants watching over us. With my grandchildren, we constructed a toy wind turbine to show them how they worked. We intend to move nearby, ourselves.

      Attitudes to wind turbines are often an aesthetic choice, and wind farms are far more aesthetically please than oil rigs, plus far less attendant pollution.

      • J4Zonian Says:

        Thanks for the personal view, toby.

        Actually, though, the last bit is backwards. Political views and employment or loyalty to fossil fuel corporations, both driven mostly by psychological conditions, mostly determines not only esthetic reactions to wind turbines but beliefs about property values (not harmed by wind) and even physical health (psychosomatic episodes driven by anti-wind beliefs and propaganda).

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