Skip to main content

6 takeaways from VERGE's 'Utility of the Future' summit

How will energy utilities and customers adapt in an era of distributed, clean energy sources and smart-grid technologies?

Last month utilities, renewable energy developers, financiers, major corporations, NGOs and other stakeholders came together in Santa Clara, California, at GreenBiz’s annual VERGE conference for its inaugural "Utility of the Future" summit.

Nearly 100 participants gathered to discuss and advance utilities’ role in tomorrow’s electricity grid amidst regulatory reform, distributed energy resource (DER) adoption and other market forces placing intense pressure on utility business as usual. Here are six themes that emerged from the workshop:

1. New utility business models and the 'minimum / maximum viable monopoly'

With growing customer choice and competition from third-party energy solutions providers, certain parts of utilities’ traditional businesses have been challenged, such as energy sales to residential and commercial customers.

In an era of flat energy sales, rising fixed costs and the rise of the "prosumer," some forward-thinking utilities have pivoted in their unregulated, competitive, retail arm to compete in these arenas. Yet utilities also continue to perform core, critical grid functions that logically remain under the purview of their regulated "natural monopoly" function, especially related to transmission and distribution infrastructure planning and grid operations. Similarly, with the proliferation of DERs, utilities can become the backbone for platforms — literal wires and software-based markets — by which DER customers can transact.

Certain functions also represent win-win opportunities between the regulated utility and market. Customer and system data traditionally collected and held solely within the monopoly may be leveraged by the utility for future revenue growth opportunities. 

Utilities can become the backbone for platforms — literal wires and software-based markets — by which DER customers can transact.

For example, a utility can partner with a home improvement retailer or appliance manufacturer to offer home improvement solutions to customers with poorly performing HVAC systems — detected remotely through simple analytics of meter data. In this way, rather than see market shifts as inexorably yielding a shrinking role of the utility, they might rather open revenue opportunities for both utilities and third-party solutions providers offering products in a rich competitive retail landscape that ultimately benefits customers.

2. Corporate offtake of large-scale renewable energy is maturing

Leading technology corporations are the vanguard of corporate renewable energy procurement. In 2015, many of these companies contracted for fixed-price PPAs as a hedge against natural gas price volatility to power growing data center loads, and in support of bold sustainability commitments. Simply put, they want the "cheapest, most reliable, cleanest" energy in the market.

To date they’ve primarily found this possible in competitive wholesale markets. A sign of market evolution, utilities are increasingly coming to the table (including in regulated markets) to share project risk and support major corporations’ renewable energy procurement.

In another sign that the market is maturing, corporate players are moving beyond the biggest, most progressive first movers to include smaller but still significant companies, such as consumer goods manufacturers and those with co-lo data centers. As the market regains momentum after a temporary, early-2016 lull, many see this year as a time for corporations to develop expertise and evaluate their options, to confidently enter the market with a more informed position.

3. Hawaii and California are the beachhead of DER deployment

When it comes to customer-sited solar, storage and other technologies, the market is most robust in Hawaii (by necessity) and California (by regulatory push).

In Hawaii, a powerful combination of swift customer adoption of DERs — especially rooftop solar PV — that are affecting grid operations and a 100 percent renewable energy target combine to make more sophisticated deployment of energy storage and other DERs a pressing need.

In California, political will via a push to integrate DERs into wholesale markets, robust renewable portfolio standard, state incentives such as the Self-Generation Incentive Program (SGIP) and regulatory mandates such as storage targets are together upholding one of the nation’s strongest DER markets. The market structures, rules, products and actors in these locales are evolving rapidly, and other states such as New York and Massachusetts are following closely on their heels. Texas — the largest electricity market and godfather state for bulk renewable development — is moving fast at their heels through a market-oriented approach.

4. There are increasing opportunities for storage at scale, yet one-off projects remain the norm

Batteries are quickly moving into the 20–100 MW size territory in places such as California in pursuit of large value opportunities such as peak demand. Yet in New York, microgrid contracts awarded under NY PRIZE as part of the NY REV initiative are largely pilots, with an emphasis on "learning by doing." But among solution developers, there’s strong feeling that the market is done learning and is ready to scale. 

Among solution developers, there’s strong feeling that the market is done learning and is ready to scale.

Whether deploying storage-only projects or multi-faceted microgrids, as Rhode Island is pursuing to bolster resilience, the question is how — not in an educational learning sense but rather in a pragmatic deployment sense. 

One option is to locate large batteries (20 MW or larger) in transmission-constrained pockets to alleviate high locational marginal prices faced by grid operators and some large customers. Another is for storage to aid transmission grid integration (PDF) of large-scale renewables, including utility-scale solar PV.

5. Cities are increasingly seen as important actors

U.S. cities have moved center stage as important actors in the energy landscape. Cities — especially smart cities — are motivated by many factors when it comes to energy and their electricity systems in particular, including resilience and customer/citizen choice and empowerment/control. One city representative elegantly described the energy motivations as the three Ds: decarbonization; decentralization; democratization. 

Panasonic CityNOW takes a unique position in the market by bringing the city and utility leadership to the table from the outset to act as a conduit for shared opportunities, such as using street lighting infrastructure as the foundation for a safe and smart street technology network. 

Similarly, whether from the perspective of "city as customer" or "city as steward of its citizens and businesses" or even "city as municipal utility," utilities have the opportunity to bring more renewable energy — including solar PV — onto their system to not just meet RPS targets, but also respond to customer interests and city climate goals.

6. Electric vehicles continue to generate buzz

Battery electric vehicles (BEVs) continue to generate a lot of investment and utility interest, but primarily from the standpoints of a) PEVs as core to a new mobility future and b) PEVs as a source of load growth for utilities that otherwise have faced stagnant energy sales in recent years. 

There remains comparatively little talk of V2G services, such as what could be enabled with two-way PEV charging. Nonetheless, second-generation PEVs at the sweet spot of long range and competitive price — including Chevy’s Bolt and Tesla’s Model 3 — are a game changer justifiably generating a lot of excitement among utilities and beyond.

This story first appeared on:

Coronal Energy

More on this topic

More by This Author