Utilities Prepare for Citizen Power Generators

When President Obama announced his landmark climate change regulations earlier this month, he put forward an ambitious goal for reducing emissions from the nation’s power plants. Under the new policy, by 2030 all the nation’s utility-scale generating plants must reduce their emissions levels by almost a third from their 2005 levels. And under the new national policy, homeowners will become far more active participants in the energy equation, by making the power from their rooftop solar panels available on the grid, and by engaging in far more active energy saving at peak times. It points out that we are creating a new energy landscape – and both utilities and consumers will need new approaches and new technologies to build this future. In many states, utilities have already been grappling with how to meet mandates to dramatically reduce emissions, and do it soon. In states like California, that mandate is accompanied by regulations demanding utilities generate a significant percentage of their power from renewable sources. All California utilities, including those that are publicly owned, must use renewables to generate 25 percent of their retail power by the end of 2016, increasing to 33 percent by the end of 2020 (California Energy Commission). Other states aren’t far behind. Given these mandates, the use of renewable energy sources like wind and solar has been increasing at a rapid clip. That’s changing the very nature of the grid, in both engineering and economic terms. The only solution to both problems is to deploy new types of technology, in new ways that will change the way in which both utilities and consumers interact with the grid and each other. Economically, the cost of building large-scale renewable generation is enormous. The Mojave Solar Project, online since 2014, cost an estimated $1.6 billion – and projects of that scale are practical only in certain locations and subject to contentious land-use issues. In addition, many utilities are still paying for existing fossil fuel plants as well, further complicating their abilities to lay out this kind of capital. At the other end of the grid, solar panels are appearing on a growing number of rooftops, both home and business. The aggregate power that can be generated by these resources can provide a significant contribution toward these aggressive emission reduction goals, and the capital costs are borne by the property owner (often with the help of subsidies). As the owners of these individual systems seek to integrate them with the grid, however, utilities now face a host of new operational and regulatory challenges in terms of capacity, reliability, load management, and revenue reduction. The one option most utilities don’t have is to delay this rooftop transition, or to roll back regulations. The solution, then, is to manage these new sources in new ways. Crucially, part of this move to renewable, customer-sited sources has to be the integration of utility-grade energy storage and intelligent management of these rooftop resources. First, such technology makes it practical to aggregate the solar and storage capacity in an area into a “virtual power plant” that can act just like a traditional small generating station. Software in the cloud can provide utilities with the ability to control the individual solar + storage systems so they can be brought onto the grid when needed in a balanced and controlled manner, rather than randomly. That also reduces utilities’ need to invest in new sources of generation such as expensive peaker plants. Second, technology like this helps customers by firming the intermittent nature of their PV arrays. They have a more reliable energy source, and will see lower bills as a result. Third, as technology advances and more “smart homes” are built, the ability to manage demand becomes easier. Consumers, who have the opportunity to participate in this new energy landscape, can do so without having to invest time in actively managing their usage: The utility will do it for them, based on their preferences, thus acting as a network operator and manager, not just an energy supplier. This is the technology we’ve been working on at Sunverge Energy for the past six years, and it’s paying off for utilities around the world. In places like Australia and New Zealand…even in states where clean coal technology dominates generation, the storage and cloud-based software management we provide helps to deal with peak load shifting and demand management, storing power at times of low demand and reducing stress on the grid at peak times. As power companies and regulators begin to deal with the implications of the president’s new climate change policy, this kind of technology is no longer something for the future. It very much has to be a piece of the present. Ken Munson is co-founder and CEO of San Francisco-based Sunverge Energy. This post was first published on LinkedIn Pulse.