renewable energy

Imagining the Utility of the Future

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Traditionally asset-focused and utility-driven, the energy sector is undergoing an important evolution. Driven by the digital revolution and disruptive new technologies, electricity consumers are increasingly more informed, connected and demanding than ever before. 

Recent advances in renewable energy accessibility and policies supporting distributed energy resources like battery storage technologies have left me thinking about one big question, “What will the utility of the future will look like?”. Given the uncertain timing of these changes, future-ready power utilities have to think ahead to meet the challenges this evolution poses.

 Electric Utilities Today

Whether powering appliances, leaving a light on at night or connecting to the internet, many of modern life’s most basic functions require electricity. For decades, electric utilities have been paramount to the United States’ energy grid. By engaging in the generation and distribution of electricity for sale, utilities serve as the primary energy providers around the world. 

In the U.S., many states have historically required consumers to sign up through their local utilities to keep the power on in their homes and businesses, and even states with so-called deregulated energy markets continue to rely on local utilities for power delivery and grid maintenance.

When we pay for the energy that we consume, we typically pay for the kilowatt hours (kWh) used, transmission and distribution, customer service and various fees. When you pay your electric utility bill, that payment is not just for the electricity you consume, but it also contributes to helping the utility maintain the grid and pay its workers’ salaries. 

The price you pay can also depend on a number of factors, including your location, what time of year it is, consumption, market changes/disruptions and more. As of March 2019, the average electricity price is 13.31 cents per kWh for a residential customer in the United States. 

Historically, utilities take a one-size-fits-all rate structure, but some forward-thinking utilities are searching for better ways to engage their customers, introducing new rate plans. 

New Rate Options: Xcel Energy

Take Xcel Energy’s residential rate plans for the state of Colorado as an example. Xcel Energy has deployed two additional pricing plans that enable its customers to control their costs based on how and when they use energy. 

Both plans give consumers an opportunity to pay less for the energy used, and if customers are flexible in how they consume energy during on-peak hours (weekdays from 2-6 p.m.), their bills can drop even lower.

 Time-of-Use Pricing Plan

•  Charges different rates based on the time of day electricity is consumed. This plan allows customers to take control and save money by shifting optional usage to off-peak hours.

 Peak Demand Pricing Plan

•  Gives consumers the ability to control the rate they’re charged even further. It requires that consumers understand their energy demand, which is measured during on-peak hours. The peak demand charge is determined by the highest hours of usage during that peak period, allowing customers to save money by consistently shifting and staggering energy usage. 

 While electricity bill payments today are based on customer usage, at Hygge Power, we don’t believe that’s going to be the way it plays out in the future.

The Utility of the Future

As the electricity utility sector shifts away from a centralized, usage-focused past to a more distributed, renewable-focused future, forward-thinking utilities are searching for better ways to engage their customers. Experts are wondering whether the current utility model is sustainable — or even necessary — for the future of energy. 

 Consider Google and Amazon’s foray into the space. With increasing investments in the energy space, the two tech giants could play a significant role in determining the future of utilities. Amazon recently partnered with Arcadia Power in an attempt to make it easier to lower a consumer’s power bill. Their idea is that “home efficiency” bundles—including a smart thermostat, smart plugs and smart LED light bulbs—can help homeowners reduce energy costs. Additionally, both Amazon and Google are leveraging voice-assistant device platforms like Amazon Alexa and Google Assistant to provide utilities the opportunity to better engage their customers by answering questions about energy use and bills with real, personalized data.

 From energy storage to advanced power electronics and control devices, a variety of emerging distributed technologies are creating new options for consumers and utilities alike. With consumers gaining more insight into usage, they’re also gaining significant bargaining power, and utilities need to re-examine their business models in order to remain relevant, meet the heightened consumer expectations, and continue creating value. 

What Do Customers Want?

Uninterrupted Power

-    In demanding more continuous connectivity with everyday devices, consumers will increasingly aspire for reliable power supply. 

 Access to Renewable Energy

-    Climate-conscious consumers expect energy from low carbon energy resources, helping to speed the growth of renewables.

 Control and Convenience

-    With the ubiquity of smartphones and connected devices, consumers expect more control over how much and when they consume energy so that they can optimize their energy usage.

-    Additionally, consumers have come to expect more real-time information on services, outages, consumption, etc.  

Imagining the ways that utilities of the future can provide enhanced value to consumers is something that we do everyday at Hygge Power. What’s your vision for the utilities of the future?

We’d love to hear your ideas!

Written by Caleb Scalf.

The Future of the Power Grid and Climate Change

Since the summer of 2014, investigators have blamed more than 1,500 fires on PG&E power lines and hardware and the company’s equipment is suspected to have caused the Camp Fire. Because California law requires utilities to pay damages for wildfires if their equipment caused the blaze even if the utilities were not found negligent, the question around PG&E filing for bankruptcy soon became a case of when, not if. When the utility company officially filed for Chapter 11 bankruptcy protection, the prospect of facing more than $30 billion in liability made clear the implications of building resilience into business operations.  

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This isn’t a litigation of how PG&E conducted itself, mostly because it’s too early to say what will happen. Instead, let’s look at some lessons that can be drawn from the toxic mixture of climate change and faulty equipment and infrastructure. More specifically, we’re interested in thinking about how our reliance on the grid — any grid — can jeopardize business continuity and emergency preparedness during extreme weather events.

We can’t get around the effects of climate change and its impact is only growing more extreme over time. Consequently, PG&E, other utility companies and the business community in general needs to be prepared to address business continuity and emergency preparedness in the event that one of these extreme weather occurrences happens.

How many operations can you think of that require unimpeded power? For the majority of modern businesses, connectivity is crucial, and they require uninterrupted power from the country’s energy grid. When looking at the country's aging energy infrastructure, there’s no wonder that it’s failing in certain places. 

The equipment has a 50-year life span, but because much of it was installed in the 1950s, it’s already approaching 70 years in operation. Additionally, a 2015 review of U.S. infrastructure found climate change to be "by far" the biggest threat to it. Compounding the issue, our country’s growing population places increasing demand on the grid as new developments that require electricity are being built and more electronic devices are making their way into homes and offices. While generation is flat, the demand for energy is increasing, and as a result, increased pressure is placed on utilities and the power grid.

Interruptions in electricity service vary by frequency and duration across the many electric distribution systems that serve about 145 million customers in the United States. In 2016, the average U.S. electricity customer was without power for 250 minutes and experienced 1.3 outages.

Procedures and Processes

What procedures and processes are in place to ensure the minimum level of service to utility customers? Across the United States, the power sector is struggling with its vulnerabilities to climate change. Utilities around the country are fortifying their infrastructure against hurricanes, wildfires and other extreme weather events exacerbated by climate change. But because projects such as moving power lines underground to prevent wildfires are extremely costly, price hikes could be passed along to residential and commercial customers as utilities and other major infrastructure players attempt to deal with climate change. As PG&E’s bankruptcy illustrates, we need to cut down the costs of climate change and we’re going to have to find a different way to structure the system, otherwise no utility will be able to survive.

Renewable Energy + Energy Storage = Better Emergency Preparedness

While some customers have backup generators that provide auxiliary power, most customers are without electricity when outages occur. Many current energy solutions are too expensive for the majority of homes and businesses — whether discussing energy storage or renewable generation. 

Fortunately, as technology progresses, renewable energy and distributed energy storage are becoming increasingly vital aspects of how forward-thinking utilities design, manage and maintain their distribution grids. 

In fact, the United Nations’ Intergovernmental Panel on Climate Change’s (IPCC) special report Global Warming of 1.5 ºC, noted that distributed energy storage has the potential “to significantly alter the grid as we know it.” Additionally, renewable energy is accounting for an increasing percentage of domestically-produced electricity. Optimal climate emergency preparedness will ultimately involve coupling renewable generation for cost savings with backup energy solutions in the event that some equipment fails on the other side of the grid.

With each extreme weather event, the socio-economic impacts of climate change continue to grow and it’s too expensive for most companies to become completely grid independent, but there’s a case that exhibits how working with grid operators and owning a decentralized storage solution can save money and deliver an extra level of emergency preparedness. There’s no magic bullet solution to solve all the climate-related energy problems, so we have to work together. Disaster preparedness will not mitigate the impact of climate change, but it can drastically reduce the impacts upon people, business and the community.

About the authors: Caleb Scalf is the founder and CEO of Hygge Power, a Boulder, Colorado-based energy startup working on the future of energy generation, distribution and storage.Chris Chen is an independent consultant. He recently retired from SDG&E as their Strategy Development Manager, focusing on business model innovation and advanced technology. He has two Smart Grid-related patents and is a frequent speaker at industry events. 

Hygge Power is Returning to Free Electrons!

We are pleased to announce that Hygge Power has been invited to Free Electrons, arguably one of the most prestigious and selective energy startup programs in the world. Each year, Free Electrons offers startups the chance to collaborate with 10 global energy giants. Free Electrons seeks the most promising later-stage energy startups and is committed to supporting energy entrepreneurs and startups in transforming the energy market by co-creating the next generation of ideas in energy, energy efficiency, e-mobility, digitization, data-driven business models and on-demand customer services.

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About the Free Electrons Program

The 2019 Cohort begins this week as a one-week bootcamp in Dublin, Ireland, followed by successive modules in Ohio, Hong Kong and Lisbon, Portugal. During the bootcamp, the top 30 companies are invited to showcase their respective solutions and teams. After, selected startups participate in three modules of roughly a week each, competing for the coveted “Free Electrons World’s Best Energy Startup” recognition, with a prize of $200,000.

Value of Free Electrons Program

For Hygge Power, the program offers an unprecedented opportunity for us to share our OPO smart plug and home energy storage device with clean-tech investors and leaders across a global network of potential customers. On top of that, Free Electrons helps us quickly “level up” with curated support and access to a network of utility giants, which is crucial. Utilities, in general, have barriers and a lot of red tape to deal with, and we have seen firsthand how the Free Electrons program can help remove those obstacles.

With Free Electrons, energy startups are afforded the luxury of legitimate face-to-face time with 10 utilities during workshop sessions in order to determine whether a pilot aligns to their objectives, what the success criteria are, and what additional resources are needed from the utility. From there, the program kicks off pilot programs for immediate testing, allowing for true innovation.

Beyond in-depth meetings with leaders of global energy giants and opportunities for strategic investments from utilities, startups chosen for Free Electrons receive unparalleled exposure to Australian, Asian, European and U.S. markets through three separate week-long ‘customer adoption’ modules. Each startup benefits from spending one-on-one time bouncing ideas off mentors and other mentorship support, and the program is structured to facilitate ongoing conversations between startups and utilities to seed pilot projects, investments and other commercial relationships.

What We Learned From Our Participation Last Year

Our interactions with utilities like American Electric Power (AEP), AusNet Services and Electricity Supply Board (ESB) all contributed to shaping the last 12 months at Hygge Power. Whether or not a company that makes it through every module, the mentor conversations the program facilitates can be invaluable if the company demonstrates the capacity to learn.

For example, AEP offered great feedback on improving customer satisfaction. Focused on building a smarter energy infrastructure and delivering new technologies and custom energy solutions to customers, AEP is aiming to become more of an energy partner with customers rather than being an energy provider, and because of that conversation, we were able to determine the value we can leverage customer-centric utilities like AEP to create highly satisfactory experiences for utility customers. We also spent a great deal of time with AusNet and ESB, major energy players in Australia and Ireland, respectively, discussing load shedding and the grid edge tipping point, alternatives to upgrading substations. These discussions brought us back to the drawing board, which helped shape our enhanced commitment to shifting critical plug loads without negatively impacting a customer’s energy uptime and therefore experience.

We look forward to this week’s opportunities to collaborate with these select utilities to receive further feedback, develop near-term “proto-pilots” and use case scenarios for our OPO products.

Stay Tuned!