renewables

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. 

Don’t Plug This into That: This is Why Powering Our Essential Electronics Can Be Costly

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Here’s our advice on how to power the things that matter most to you. We call it the Pico-Grid.

 We use a lot of energy each day. 

 While we use electricity practically every minute of every day, not everyone understands the major uses of electricity in our homes and offices. Reducing electricity usage is a big opportunity to reduce both monthly power bills and carbon emissions. And the crucial first step toward diminishing electricity usage is understanding it. 

 By looking at how electricity is used, we’re able to develop a better understanding of the way we individually consume electricity. When we’re able to separate electricity usage into different end uses, we can see where the major demand for electricity is in most home. But before we can understand how energy is used, we need to develop an understanding of some key terms and how they fit into our power system.

 Behavior-Based Critical Loads

The “plug load” refers to the amount of energy being used by a home or building through its electrical outlets by things like computers, TVs, printers, vending machines, refrigerators and more. The more appliances and electronic devices that are plugged in throughout the home or building, the larger the plug load. Because a home or building’s plug load can account for a huge percent of its total energy use, better managing plug loads can have a sizable impact on the home or building’s energy efficiency.

 Critical, or essential, loads are those electrical loads to which power supply has to be maintained. The power supply to these loads should never be interrupted because it powers the devices and appliances we need, or use, most. When discussing behavior-based critical loads, the way in which we interact with and use energy determines what the most critical loads are based on what is used most frequently or necessary to sustain the continuity of our lifestyle or business.

 According to “Home Idle Load: Devices Wasting Huge Amounts of Electricity When Not in Active Use,” the largest electricity uses in U.S. homes — heating and cooling, lighting and refrigeration — account for just 15 percent of always-on electricity consumption. Consumer electronics (televisions, computers, printers, game consoles, etc.), on the other hand, account for 51 percent. 

 Whether discussing refrigerators, Wi-Fi routers, security systems, entertainment systems, garage doors or sump pumps, these loads are most essential because we either use them most or need them — even during small outages. It’s in this behavioral-based idea where certain electronic devices and appliances can begin to be seen as more important than others (your washer/dryer, for example).

 Certain Electronics and Appliances are More Important

Because of this difference, essential electronics should have power priority over those less critical devices and appliances. If you think your Wi-Fi router or fridge is more important than other electronics around your home or office, the cost of that energy is more important, too. 

 When end users are able to assess how loads are broken up around their home or office, they’re able to ensure the continuity of their lifestyle or business without interruption in the event of an outage. By tracking your plug load, users can determine where energy is being wasted as well as used, which, in turn, allows for the use of advanced technologies to shut off the flow of energy to certain devices at certain times in order to cut down on wasted energy.

 Reliable Backup Power (also known as Distributed Energy Storage)

We need to consider a better way to manage the grid at a micro-utility scale. If you want backup power, or reliability of power for a home or building, there are energy storage options out there. You just have to spend a lot of money to get microgrid-sized or Tesla Powerwall-sized storage because you’re powering everything as opposed to the essentials. When it comes to energy storage today, all electronics and appliances are considered equal, they just need power. But it doesn’t have to be this way.

 It’s too expensive to generate energy all by yourself, so use the grid infrastructure that already exists. This is where the idea of a “pico-grid” that leverages distributed energy storage comes in, where consumers can power just the items that are most essential around the home and office first. With distributed energy storage on a pico-grid, it doesn’t matter what happens on the outside of the meter because if an outage occurs, you’re protected on the inside.

 When you manage personal grids at a micro-scale, it plays into the bigger picture of reliability and resilience as well. In fact, opting for a personal grid doesn’t mean you’re separating yourself, becoming off grid or completely independent from everything else. It’s actually the cooperation of the interconnected main grid down to your grid all working together to better manage plug loads. 

 What Matters Most to You?

Think about what’s most important to you because that impacts the grid at large, how energy is being managed and how sustainable and efficient it can be. All we have to do is look at how energy is used in our homes and office to understand our personal grid and take initiative to become more energy efficient. If we understand that and the notion that there’s other critical things that are important to power that keep our lives and businesses going, it might help the big picture of how to generate and distribute energy in the future.