Utility Nightmares: Distributed Generation and Halving Electricity Consumption

While many utility executives attribute much of their predicted market challenges to the rise of photovoltaics and net metering, they actually have much more to worry about.

In a 2013 survey of global utility companies by PricewaterhouseCoopers, the results revealed that the utility industry leaders anticipate major changes to their business model in the near future. Ninety-four percent of international industry representatives surveyed predict that the power utility business model will be either completely transformed or significantly changed between today and 2030, while only 6 percent expect that the utility business model will stay "more or less the same."

In North America, 40 percent of respondents believed that utility companies' means of making a profit will see major changes over the next two decades. A strong majority — 82 percent — of North American respondents also said future energy needs will be met by a mix of traditional centralized generation and distributed generation, which feeds power from a mix of sources.

But while renewable on-site energy generation offers a major challenge to the electric utility business model, the lower capital cost energy efficiency approaches, will be the hardest hurdle. Not only because the initial capital costs are lower, the payback is faster, and the energy savings are huge. In fact just four effiency options can cut building electricity use by 50 percent, and there are many more options than what I cover here.

Smart Thermostats and Controls: 10 Percent Reduction

The city-owned electric utility, Austin Energy, (Austin, Texas), gave away 90,000 programmable thermostats over a dozen years, at $250 a piece, totaling $19 million, the largest thermostat giveaway in the U.S. Each thermostat unit had a radio controller that gave Austin Energy the ability to change the home's temperature., which wil help Austin Energy work toward a goal of shaving 800 megawatts off its peak load by 2020. A researcher at Lawrence Berkeley, said even the most perfectly managed thermostat can't reduce a typical home's energy usage by more than about 10 percent.

Since then, as David Ferris at EE News pointed out, the big boys have jumped into the market. Lowe's, a national home improvement chain, rolled out a $299 package that includes a front-door keypad, thermostat and door-opening sensors that can all be managed with an app. Comcast Corp. has a thermostat that it claims can lower a home's energy use even if the dweller never touches it. Home-security companies Vivint Inc. and Alarm.com are selling connected thermostats, as is ADT Corp., which thinks temperature control is key to its expansion into smart home networks. Most significantly, Google Inc. recently bought Nest for $3.2 billion, the second-largest acquisition by one of the world's largest tech companies. Ferris noted, “By comparison, Google paid only half as much for YouTube, the world's leading platform for online video. In the words of John Steinberg, a co-founder of EcoFactor, a Nest competitor, "Google wouldn't have paid $3.2 billion just to get a thermostat company."

Lighting: Minimum 10 Percent Reduction in Building Energy

But there’s more. A lighting technology revolution is underway with both LED lights, computerized lighting controls, and solar daylighting (the technology that uses lenses and reflectors to bring in full spectrum light without the heat gain).

EIA reports that early 40 percent of total U.S. energy consumption in 2012 was consumed in residential and commercial buildings, or about 40 quadrillion British thermal units, and over a third of that (34.6 percent) was for lighting in buildings.

EPA’s Energy Star states that LEDs use at least 75 percent less energy than incandescent lighting, saving on operating expenses and reducing maintenance costs becayse they last 35 to 50 times longer than incandescent lighting and about 2 to 5 times longer than fluorescent lighting — no bulb-replacements, no ladders, no ongoing disposal program. And for solar daylighting, the results are even greater.

The U.S. Department of Energy (DOE) goes even further, stating LED efficiency is as good as or better than fluorescent lighting. The DOE estimates that switching to LED lighting over the next two decades could save the country $250 billion in energy costs over that period, reduce the electricity consumption for lighting by nearly one half, and avoid 1,800 million metric tons of carbon emission with over 20 LED studies.

Solar Water Heating (And Others): Minimum 9 Percent Reduction in Building Energy

The Energy Information Administration (EIA) also reports that 17.7 percent of our energy is for heating water. And solar water heating should meet 50-80 percent of that water heating load, according to the DOE. Waste heat from geothermal heat pumps or cogeneration and CHP systems can reduce that even further, meaning even more cost-effective options for consumers.

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Like many electricity does A market need?

Del Mar, population ~4,100, is an affluent beach city just north of San Diego. Solana Beach, also on the ocean and just north of Del Mar has ~12,000 residents. Carmel Valley is a master-planned adjoining community with a population of ~40,000. Can Del Mar, Solana Beach, and Carmel Valley each have their own micro-electric utility (MEU), providing cleaner, cheaper, and more reliable power than the current San Diego Gas and Electric (SDG&E)? Can Carmel Valley have four or five MEUs, and the city of San Diego one hundred?

Maybe Mumbai, India can support five hundred or one thousand MEUs.

Microgrids are scalable, and relatively new in consumer applications; we don’t really know what the optimum population each microgrid serves is. The question is: How small can an economically viable electric utility be? Can the electricity business be in thousands of private, entrepreneurial hands, and not with monopolistic, state-run or regulated enterprises?

Electricity: No Longer a Natural Monopoly

Electricity services from today’s few giant, mostly coal-based and regulated power companies have worked well for over one hundred years. The utilities owe their existence in their present form to several increasingly invalid assumptions, principally that the electricity business is a natural monopoly.

The electricity business until recently consisted of “natural monopolies arise where the largest supplier … has an overwhelming cost advantage over … competitors; this tends to be the case in industries where fixed costs predominate, creating economies of scale that are large in relation to the size of the market, as is the case in water and electricity services.”

But this is no longer the case. Technological advance has rendered the “natural monopoly” model obsolete. With microgrids, we can have electricity at today’s costs from small, community-sized infrastructure. Dadar Electric, named after a locality in Mumbai, can compete with Maharashtra State Electricity Board, and Del Mar Electric with SDG&E.

Looking back one hundred years at a clean slate, and given technology trajectories, we would not build the electricity infrastructure of today. We would build thousands of MEUs, each linked to the others like a swarm of bubbles. Only the benefits of incumbency — “lock in” — keep the utilities the way they are. Markets find a way to “right size” such anomalies; though the transformation can take long.

For those who think the utilities are powerful and entrenched, consider: In November 2013, Berlin had a referendum to “municipalize” their electric utility by wresting it away from Vattenfall, a multi-national utility company. That vote narrowly failed, for now.

With microgrids:

Electricity can be produced less expensively than through traditional fossil fuel fed large generation plants,Power generated locally is consumed locally. It is cleaner since microgrids use solar, micro-wind, batteries, fuel cells, and diesel or bio-diesel based generation, optimized to meet local demand. They do not incur transmission costs,Standalone existence for a utility is possible; macrogrid connectivity is optional.Relative economics improves with advancing technologies, and also since the existing utilities will become progressively less competitive when emissions are priced, inevitably, by a carbon tax.
How Many MEUs Can the US Support?

Rand McNally defined U.S. markets as 493 Basic Trading Areas (BTA) that were auctioned for mobile telephone services in the mid 1990s. If each BTA had 10 MEUs, it would total ~5,000, depending on the demographics of individual markets. In other words, a MEU would be available for every ~ 65,000 people.

Consider a university of 15,000 students with faculty, staff, and related businesses, totaling ~60,000 people dependent on the university. Can a university campus be served by a MEU?

Markets may be defined in other ways, by municipalities, for instance. For example, the Sacramento Municipal Utility District, SMUD serves a population of 475,000. By the foregoing argument, Sacramento can have 8 MEUs. Could San Francisco have about 15, and could Portland support 10?

Can supermarkets and their population served be used as a proxy for microgrids? The U.S. has over 37,000 supermarkets of median size 46,000 sq. ft. each, that is, one for every 8,000 people. If that number is optimal for a MEU, the US can support close to 40,000 standalone MEUs.

India: The Blessings of a Creaky Infrastructure

India comprises 28 states and seven union territories, sub-divided into 640 districts; each district is centered at a city or town. Some districts are large and are divided into smaller geographies called tehsils or talukas. The districts and the talukas can be candidates for several MEUs. How many?

The average district has ~1.3 million rural people. If each micro-electric utility serves 5,000 people – greater population density, lower wages compared to the U.S., and therefore smaller population for viable economics – then each district can support ~260 MEUs, and rural India can support around 170,000.

The number of MEUs can be derived in other ways. According to the 2011 census of India, 69 percent of Indians, around 835 million people, live in the country’s 641,000 villages. The village size varies; 4,000 villages have a population of over 10,000, while 236,000 villages have a population of less than 500. Let us assume that these latter quarter million very small villages are served only with standalone solar power with panels on rooftops, and the homes are not wired into a distribution network of a MEU.

Let us focus on the relatively larger ~400,000 villages. If every two villages have at least one micro-electric utility, say, managed by an entrepreneur under the direction of the village panchayat, India will contain approximately 200,000 MEUs. But some villages may be large enough to support more than one utility. The point is: it is conceivable for India to have quarter million new MEUs.

Micro-electric Utilities as Economic Stimulus

While 300+ million Indians struggle without electricity, and the rest with shortages, MEUs represent a major entrepreneurial opportunity for Small and Medium Enterprises (SMEs). MEUs can help eliminate electricity shortages and contribute to 100 percent electrification while stimulating the economy.

Can a community own its own electrical cabling, and bring in contract micro-grid electricity suppliers who offer the desired level of service? If a supplier fails to meet desired criteria, the community can switch to a new provider. Such community decisions are possible with MEUs.

Technological advancements and business logic lead us to electricity provision methods that are cheap, reliable, secure from cyber attacks, environmentally sound, and compatible with local management control.

MEUs are a compelling value proposition – substantially lower costs, unmatched features, novel services, plus other benefits of microgrids. Where reliable infrastructure exists, why fix something that’s not broken?

Currently, MEUs in the U.S. are for jails, military bases, and university campuses. But to go beyond niches, the place for MEU experimentation is rural India, where the need is basic, affordability is rising, infrastructure is inadequate, reliability is poor, expectations are high, and consumer appliance demand is soaring.

For standalone and grid-connected next generation electricity solutions, the microgrid economic modeling, optimization, prototype development, and the establishment of value propositions should occur in India. Its poor infrastructure offers greenfield deployment opportunities; the U.S. requires substitution, which is much harder.

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Electricity Loss and Theft: Who Pays?

We fret about turning off the lights to save pennies on energy. Meanwhile, electricity worth billions of dollars gets lost or stolen on the world’s power grids every year.

In industry jargon, the problem is known as ‘line loss.’ A certain amount of electricity generated by a power plant never makes it to the consumer — or at least the paying consumer. Instead it is lost or diverted somewhere over the wires. Some of it dissipates in transit for technical reasons. In other cases, it’s pilfered by marijuana growers, households, or in some countries even manufacturers.

Awesense, a Canadian company that has built its business model around solving this problem, pegs the cost of worldwide electricity loss at $202 billion annually.

Losses vary dramatically by country, with percentages running in the double digits in Brazil, China and India. In the U.S., about seven percent of the power generated goes missing. How much of that is theft? No hard figures exist, but a rule of thumb for sophisticated grids puts U.S. power theft at two to three percent. That may not sound like a lot, but the US is one of the world’s biggest power producers. So even a small percentage of electricity lost means a large amount of fossil fuel wasted.

So, in a time when we strive for greater energy efficiency, why don’t we hear more about this problem?

It’s a matter of accountability and who pays, according to Mischa Steiner-Jovic, CEO of Awesense. Regulators typically do not require utilities to absorb the costs. Instead, electricity ratepayers subsidize the thievery.

“The utility commission has not sufficiently motivated the utility to reduce its losses. Because the utilities are able to pass their losses on to the rest of the customers, they are not financially motivated to solve power theft,” said Steiner-Jovic in a recent interview.

That’s not to say, nothing is being done. Some progressive utilities in North America are taking initiative, in part for safety reasons. Utility workers can inadvertently come in contact with wires exposed by setups jury-rigged to divert power.

But North America is still far behind Brazil, where the federal government has put in place a policy to reduce electricity losses. “Energy is such an important factor for the growth of their economy. They can’t afford to lose 20-30 percent of their energy,” said Steiner-Jovic. Brazil’s electricity theft problem has helped spur the installation of smart meters, which can go long way in helping utilities identify loss.

Not all utilities can afford smart meters. And anyway, thieves sometimes maneuver around them. Awesense has developed a system to identify electricity loss for utilities with or without smart meters. The company acts as a kind of energy auditor for the grid, using a combination of software and monitoring equipment to identify where loss is occurring and why — whether the problem is malfunctioning equipment or theft. It then helps the utility put in place a strategy to resolve the problem. Like many energy service companies, Awesense operates under a ‘no upfront cost’ model — it is paid out of the energy savings achieved by the utility.

So far, developing countries have shown the greatest concern about line loss. But Steiner-Jovic predicts that North America, too, will take more notice as the consumer becomes increasingly energy aware.

“It just can’t go on that we turn a blind eye to inefficiency on the grid,” he said. “Energy is too valuable a commodity.”

Elisa Wood is a long-time energy writer whose work has been picked up by CNN, the New York Times, Reuters and the Wall Street Journal. See her articles here.

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Geothermal energy provides baseload electricity for Christmas in California

California independent system operator (ISO) maintains, reliability and accessibility to one of the largest and most modern power grids in the world. Its target of 33 per cent of electricity produced from renewable energy sources meets each day it Golden reported State on the production of renewable energy in the because it tries by end of 2020.

Families available on Christmas day as California sat down for a meal of Turkey, ham or tamales, renewables candied 2,000 MWe, of the approximately 26,000 MWe load on 06 in the early evening.

The Sun went down, and it was not a windy day in the West. However, geothermal energy offered a reliable base load supply of 928 MWe.

In addition, geothermal power delivered most on Christmas day 21.354 MWh, about 40 percent of the total renewable on this day. Geothermal energy helped bring Christmas to California! The information and opinions in this blog post are solely those of the author and not necessarily the RenewableEnergyWorld.com or companies, the advertising on this Web site and other publications. This blog has been directly by the author and has not been reviewed for accuracy, spelling or grammar.

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PPL, E.On UK electricity networks for $6 billion to acquire

PHILADELPHIA (AP) - Drag to accelerate your growth in the current operations, PPL Corp. said Tuesday that it will buy the u.k.-based central networks of electrical networks distribution business Germany E.On AG in a deal worth $ 6.4 billion.Allentown-based PPL said it would be $5.6 billion or ? 3.5 billion, payable in cash and assume $800 million debt. "PPL and E.On expect to close the deal early next month."This transaction significantly improves PPL business mix and our business risk profile ", James H. Miller, PPL Chairman, President and Chief Executive said in a statement. PPL said that it expected that the deal, if completed, could add up to 15 cents per share to its earnings potential this year." This would its 2011 earnings forecast to between $2.50 to $2.75 a share of the current direction of $2.40 to $2.60 a share lift. Analysts surveyed by FactSet forecast that the company this year will earn a share of $2.52.Last month, PPL reported that more than your profit on $ 355 million, or 73 cents per share doubled in the three months ended Dec. 31, compared with $ 153 million, or 40 cents per share a year earlier. The increase of profits is due electrical sales and some unique tax gains.5 Million customers in the Midlands of England Central networks is used by about 83,000 miles of lines, including Birmingham and Nottingham.PPL already Western power distribution, which allows the regulated distribution by 52,000 miles of lines to 2.6 million customers in South West England and South Wales has cities, including the cities of Bristol and Cardiff.With Central networks, PPL, said it will own and operate, what does it tell the largest network of the delivery of electricity companies in the UK on regulated asset value, a combined 7.8 billion dollars or ? 4.9 billion. "Opportunities as compelling as this come together not very often,", said Miller.Im December completed PPL the acquisition of two Kentucky utilities - Louisville gas & Electric Co. and Kentucky utilities co. - of E.On for 7.59 billion Dollar.Mit of the latest acquisition of PPL granted utility service to more than 10 million customers in the United Kingdom, Pennsylvania, Kentucky, Virginia and Tennessee and has, or some controls 19,000 megawatts of generating capacity.Shares in the PPL slipped 5 cents to $24.85 in trade expanded Tuesday. 53 Cents, or 2 percent to $24.90.---Online:http://www.pplweb.com/ ended the regular session

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