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Our Energy Future Rasica/iStock/Thinkstock

Our Energy Future

Do you want a say in the shape our industry will take? Then get involved!

Time is not our friend. Coal generation will go away, with much of it gone by 2020 and little surviving beyond 2030. Once most of the coal is gone, we will see natural gas generation come under pressure to close down. Nuclear generation is not economically feasible today, and regulatory changes would be needed to make it viable. Expect to see wild rivers organizations push to remove hydroelectric facilities.

Expect wildlife groups to try to limit or ban wind turbines from areas that have higher levels of bird and bat strikes. Local communities are enacting zoning ordinances that limit placement of both wind and solar installations that are visible outside the owner’s property. Society is fragmenting on what it wants in the way of generation: BANANA (Build Absolutely Nothing Anywhere Near Anyone). In short, generating any power at all in the emerging regulatory environment may be difficult. It will not get as bad as I opined, but some days it will feel that way.

FERC 1000 already influences how transmission is planned and funded. New FERC regulations will impact our transmission planning and capitalization; ultimately, it will determine how the industry sites and uses transmission to connect to new renewable generation. These rules impact who pays, which will result in pushback from state commissions. Expect FERC rulings to be challenged so the courts may have final say. Distribution is heavily in flux as Solar City, the Rocky Mountain Institute and others propose to take distribution grid operations away from the utilities and put it into the hands of independent distribution system operators.

What about solar? Solar leasing companies want to put solar roofs onto the homes of all homeowners who meet minimum credit standards to qualify for a second mortgage, without regard for technical issues. They are also pushing to install the largest, economically feasible generation capacity a site will support, even beyond net zero.

Distributed generation (DG), including solar, will have a heavy impact on planning, engineering and operations in the distribution organization; in many cases, we will reverse the trend to smaller planning and engineering staffs as planning and operations become much more complex and critical to the future of our distribution utilities.

Given the radical changes coming, regulators will “encourage” customers and distribution utilities to work together to solve issues, with a wide array of third parties, aggregators and additional support groups involved in the process.

Getting this new ecosystem to work will be a major hurdle going forward. There will be divergent goals in the ecosystem with no single entity in charge. Some will look only at how much money they can make; others want to protect economically disadvantaged groups. And others may set regulatory limits on who can do what.

If every state required 1 kW of photovoltaic (PV) generation on the roof of every one of the 130 million residential units, a lot of PV would be installed and the impact on the grid would be minimal (in comparison to other options). This would provide effectively a “negative load” impact on the grid. It would have a massive revenue impact on the utility industry and would change the daily load curve, changing the generation mix for the rest of the needed power.

Most states have adopted a “first come, first served” method of allowing DG. If the distribution grid can support it, then permission is given to install the DG. If an early mover consumes all of the available capacity on a transformer, then their neighbor can be denied permission because of a lack of capacity. If the neighbor is willing to pay the cost to change the transformer or make other needed changes to allow the grid to host their DG, then they can have permission. But the first mover does not have to pay any of the costs, even though they used all of the hosting capacity. This may end up in lawsuits and changing regulations in the near future.

To balance the system, markets will evolve. At the lowest level, homeowners may trade lighting for A/C to stay within their budget. The markets will probably become a hierarchy that starts within a home or business, then to the transformer, and then to the segment and phase of the distribution circuit, on to the whole distribution circuit, then to the substation and finally up to the typical wholesale markets. Expect that implicitly there will be ancillary services, capacity and energy markets at each level. Expect most of these markets will cost more to run than they offer in savings.

Regulatory changes are now pushing utilities and customers to take a fresh look at how electricity is generated, distributed and consumed. In some states, the changes are coming fast and furiously. In other states, the process will be years or decades in the making. Be assured that tomorrow’s utility industry will look quite different than the one we work in today.

Do you want a say in the shape our industry will take? Then get involved! We will never see a more seemingly chaotic yet challenging and exciting period in our lifetimes.

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