
Reimagining electric utilities - aburan28
http://www.vox.com/2015/9/11/9306247/utilities-21st-century
======
cavisne
As others have said most of this already exists for example in markets like
Australia, the problem for the author is none of it actually makes solar etc
work any better.

Voters dislike high electricity prices but they absolutely hate power outages
and load shedding. Thats why the regulation in this area will always be
cautious.

The market value of rooftop solar generation is close to 0 for the
distribution grid as they still need to maintain existing assets for reliable
generation, so any subsidy paid to those who can afford solar panels takes
from either the pockets of those who dont have solar panels, or from
taxpayers/shareholders.

The only way to shift to the distributed decarbonized model the author wants
while maintaining reliability is to increase electricity prices. That should
be the first sentence of any policy debate about this issue.

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ap22213
I think the author may be missing out on some of the areas of the country
where this is happening.

For instance, many places aleady have 'de-regulated' markets for energy. See
FERC 888 & 889 [1]. And, states like Pennsylvania already allow consumers to
choose between different distribution utilities.

Further, the Federal Gov't and DoE are pushing for things like microgrids and
smart cities and smart buildings where local energy can be produced and stored
and bought from and sold back to the grid [2] [3].

Traditional distribution utilities in many places are facing the 'renewable-
storage death spiral'. That is, many customers can store and even generate
energy cheaper than it costs to buy it from the utility. This causes the
utility to raise rates, which then causes more customers to switch to local
generation. Note that the residential market is just a small piece of the pie.
You have to look at commercial and industrial, which normally get different
rate structures, to see where things are happening.

Distribution utilities won't go away, but their model must change.
Residential, Commercial, and Industrial will probably always need connection
to the grid for safety reasons. Plus, distribution utilities are usually
really good, and sometimes even efficient at laying copper and responding to
outages.

[1]:
[https://en.wikipedia.org/wiki/ISO_RTO](https://en.wikipedia.org/wiki/ISO_RTO)
[2]: [https://www.whitehouse.gov/the-press-
office/2015/09/14/fact-...](https://www.whitehouse.gov/the-press-
office/2015/09/14/fact-sheet-administration-announces-new-smart-cities-
initiative-help) [3]: [http://energy.gov/oe/services/technology-
development/smart-g...](http://energy.gov/oe/services/technology-
development/smart-grid/role-microgrids-helping-advance-nation-s-energy-system)

------
eigenvector
While the author makes some good points, I can't help but feel he greatly
exaggerates the current state of the power utility industry in North America
to make his point. Fully vertically integrated utility systems have been on
the way out for at least 40 years and very few, if any, jurisdictions don't
already have some form of (a) real-time energy market and (b) open-access
transmission tariff that ensures that if there is a local transmission
monopoly, any generator can get non-prejudicial access to its power lines.

The author seems to be picking on a few edge cases, like small utilities
fighting rooftop solar because they don't have the technical capacity to
integrate it easily, and trying to expand that into an argument that the
entire North American power utility landscape needs drastic reform into
different functional entities - when that is already how the industry works.
All of the things he suggests as if they are radical ideas - markets for
balancing and other reliability services, generators bidding into a real-time
market, the grid operator as an independent entity - already exist and have
existed for at least 30 years. He literally describes the exact function of
the California Independent System Operator (CA ISO) as if he came up with the
idea.

 _" The utility's role in option No. 3 is to manage, but not participate in,
those markets.

It would set up a kind of clearinghouse, where those who have power or
services to offer register and those who need power or services come to shop.
For instance, at times of high sun when solar power is flooding the grid, the
value of solar electricity will fall, but the value of energy storage (to hold
some of that surplus for later) will rise. So solar providers will be able to
connect with storage providers, which will offer competitive bids.

The value of electrons (and other services like demand shifting, voltage
regulation, or capacity reserves) will vary throughout the day, and from
location to location, depending on grid conditions. So a key role for the
utility will be to make that real-time price information easily available, so
that market participants can make sensible choices."_

This is literally what every independent system operator in North America
already does. CA ISO. New England ISO. PJM. ERCOT. And so on.

The roles of real-time system operation, long-term system planning,
transmission ownership and operation, generation ownership and operation, and
load-serving entities are already separate and already governed by market
interactions through most of America, as well as Ontario and Alberta.

Utilities have lagged significantly in delivering the kind of market
flexibility that already exists in the transmission and generation industry to
the distribution arena, and allowing distribution-customer-owned energy
resources to participate in the same real-time markets, but that's largely
because of technical limitations and the fact, acknowledged by the author,
that distribution is a natural monopoly.

The author also has some severe misconceptions about the nature of long-term
power-system planning. He writes:

 _" The overriding idea is to, over time, replace central planning with
markets. Rather than a utility deciding years in advance how much demand there
will be, how much supply is needed, and how much it all costs, those decisions
will be made on an ongoing, real-time basis by the dynamics of competitive
markets."_

A nuclear plant that takes 10 years to build or a transmission line that needs
5 years of negotiation with landowners to secure the right-of-way, cannot and
will not be built on the basis of a real-time market. This is why very few
merchant transmission lines exist anywhere in the world. Long-term power
purchase agreements are still needed to distribute the massive risk inherent
in building something that costs tens of billions of dollars, has a payback
period of 20+ years and takes a decade to build. This has nothing to do with
markets vs central planning; something does not cease to be market-based
simply because it is no longer real-time. Owners of major utility system
assets need some means by which to insulate themselves from the risks of
minute-by-minute price fluctuations when they are building infrastructure to
last 50 to 100 years. Markets provide this through long-term fixed-price
contracts.

I honestly feel like this article came from a time machine where the author
just stepped out from 1960 because nearly everything he wants, already exists.

~~~
jqkeller
Maybe at the 100MW scale it already operates like this, but not at smaller
scale. Recently I had a discussion with a county level public utility district
where we were exploring building a 1-10 MW Solar system on a closed landfill.
The capability existed for us to wheel the power to a load that was interested
in the energy, but the smallest chunk of capacity we could buy was 1MW and the
cost to wheel the power would require a >90% capacity factor to make it
economical.

So the system may well exist, but I think there is benefit from some scaling
down of the market rules.

~~~
barney54
As I read your example, it sounds like the problem is solar's low capacity
factor, not scale. But maybe I'm not understanding the example.

~~~
jqkeller
Under the current regulatory schemes and market rules the low capacity factor
of solar is absolutely a problem. I guess I'm saying that more flexibility for
smaller systems to play in the markets will be important to increase renewable
energy production. The advent of cost effective storage will obviously make
the whole discussion easier.

------
ilaksh
Ubiquitous solar, wind, and batteries together with much more energy efficient
buildings and devices will make traditional electric utilities mostly
irrelevant. In the future, long or even medium length electric distribution
will mainly be for back-up purposes. Nano/micro-grids will be more like
commercial/consumer products purchased by neighborhood developers or
individual homeowners, that integrate over common platforms, rather than
utilities.

[http://tinyvillages.org](http://tinyvillages.org)

~~~
barney54
I could see some of this with solar, but not as much with wind. Wind does much
better as large turbines--such a 1.5-2 megawatt turbines--not small scale
stuff. One reason for this is that wind resources are much better at say 80
meters than close to the ground.

Plus, for wind to work well you also need a wide geographic area to even out
some of the intermittency. That requires a big high voltage grid.

~~~
ilaksh
Rooftop mounted VAWTs do a good job of supplementing solar. The best VAWT
designs perform at relatively low wind speeds. They do not need to compete
with large systems mounted high in the air. You do not need a big high voltage
grid when you have batteries for each home or group of homes.

~~~
strommen
Maybe, but not until the distant future.

We do not have the battery technology to make micro-grids feasible for the USA
at large (much less the world). In fact, we don't even have enough known lead
and/or lithium to build batteries to do this with today's technology.

Here's a good read on the challenges: [http://physics.ucsd.edu/do-the-
math/2011/08/nation-sized-bat...](http://physics.ucsd.edu/do-the-
math/2011/08/nation-sized-battery/)

~~~
ilaksh
That article is outdated. Its basing figures on an older technology in lead-
acid versus Lithium and battery manufacturing has started exploding since
then.

He also assumes the same level of inefficiency. With the technologies and
policies in my plan, the U.S. can easily be 8 times more efficient.

