Economic forces increasingly favor wind and solar. Creating the right regulatory incentives could accelerate the adoption of renewables, says the Rocky Mountain Institute.
by James A. Bacon
Consolidated Edison, the utility that provides New York City’s electricity, confronted a challenge in the summer of 2014. Forecasts showed that demand for electricity in parts of Brooklyn and Queens would overload the company’s electric grid by 69 megawatts on the hottest summer days by 2018. The traditional solution would have been to build a sub-station at a cost of $1.2 billion.
Wondering if there might be a better way, Con Ed solicited ideas for alternative solutions. So far, it has gotten 80 suggestions. Some were so good that the company plans to employ a portfolio of techniques — mainly energy-efficiency measures, fuel cells and neighborhood-scale solar — to shave off 52 megawatts at a cost of only $200 million, according to Inside Climate News.
Although 2018 is still two years away, early indications are positive. The so-called Brooklyn-Queens Demand Management project is being watched widely as an example of how energy efficiency, solar power, battery storage and other green energy strategies can not only reduce carbon-dioxide emissions but save rate payers money.
That’s just one example of how innovation is blasting apart the traditional electrical utility model, says Jesse Morris, a principal with the Rocky Mountain Institute (RMI), whom I chatted with when I visited Aspen, Colo., earlier this month. (Sad but true, my idea of a vacation includes meeting policy wonks in the places I’m visiting.) RMI bills itself as a market-oriented, environmentalist think tank. Re-conceptualizing the electric grid is one of RMI’s main missions. And Morris is one of RMI’s leading thinkers on the subject.
I wondered if RMI was thinking about things we should be thinking about in Virginia. Meeting me in RMI’s net-zero energy headquarters building in Basalt, Colo., Morris outlined three “big, disruptive trends” he sees transforming the electric grid.
The Internet of Things (IoT). The Internet is permeating everything; every new appliance, device, sensor and actuator is being assigned an IP address, and each device is capable of talking to the others. As a result, businesses can track energy usage with unprecedented precision, generate unprecedented volume of data to analyze, and control systems with unprecedented precision. When millions of thermostats, lighting systems, hot water heaters and other energy-consuming devices are connected, managing the demand side of the electricity system is getting easier and easier.
Declining cost of enabling technologies. The cost of generating solar power and wind power is dropping steadily. Renewables are economically competitive with conventional energy sources in geographic “pockets” around the country, and those pockets are growing. Meanwhile, progress is being made in related technologies such as lithium ion batteries which can store excess electricity production from wind and solar and release the power when needed most. “The cost trajectory of batteries is incredibly promising,” says Morris.
Corporate demand. Many corporations are insisting upon green power. Indeed, environmentally sensitive companies like Amazon Web Services are driving the demand for solar power in Virginia where the company is building many of their energy-intensive data centers. “Last year,” says Morris, “more solar and wind farms in Virginia and North Carolina were deployed by corporations than utilities.”
While the grid of the future isn’t here yet, says Morris, it is coming. At present most experimentation is occurring in places like Hawaii, California and New York where there is a strong commitment to green power and high electric rates make it easier to justify investing in alternative approaches. But change is occurring everywhere. Con Ed’s Brooklyn-Queens project shows that the potential exists to save literally billions of dollars.
The Brooklyn-Queens approach to electricity infrastructure is not pervasive, he says, because state regulations don’t encourage most utilities to think like Con Ed. Power companies make money by building stuff — power stations, transmission lines, sub-stations, distribution lines, and the like — and earning a Return on Equity on their outlay of capital. Approaching a problem as Con Ed did, which saves the expenditure of $1 billion, doesn’t help a traditionally regulated power company grow. Regulators need to change rate structures to incentivize companies to economize like Con Ed. Continue reading