HYB25-5
The future of decentralized electricity supply: Empirical evidence from the field
05 HYB25-5
Presented by: Fereidoon Sioshansi
Advances in technology and falling costs of distributed generation and storage plus the arrival electric vehicles (EVs) with bi-directional charging/discharging capabilities has reached a "tipping point" which allows millions of customers to become presumers or go a step further by becoming prosumagers -- that is prosumers with storage.
This phenomenon is already present in jurisdictions with sunny climate, high retail electricity prices and high percentage of customers living in suburbs in detached homes. In most case, heavy air conditioning load is strongly correlated with solar generation. Examples include Queensland and South Australia, California and Hawaii where millions of customers have already made investments in small-scale hybrid solar + battery + EV systems. In most cases, these prosumagers can drastically reduce their net electricity purchases from the distribution network. Empirical evidence from California, for example, suggests that the kWh purchased from the distribution utility could go from 12,000 kWh per year to below 1,000 kWh -- with devastating implications for utility revenues.
Belatedly, the regulators have awaken to the challenges that these trends pose while also -- slowly -- recognizing the value that distributed small-scale hybrid systems offer to the grid if the systems are properly managed and integrated into utility operations, planning as well as grid operations.
Slowly, the thinking is changing to acknowledge all distributed energy resources (DERs) as a positive complement to an increasingly electrified, decentralized and intelligent "ecosystem" where customers are at the center with the "bulk power system" built around their service needs. In such a "bottom-up" ecosystem, customers are encouraged and enabled to take advantage of cost-effective opportunities "behind-the-meter" as they see fit while the network is re-configured to meet their "residual" needs, such as balancing service, providing reliability and back up when required. The remaining customers can continue t receive full services as before with the tariffs adjusted to avoid cost shifting and/or uneconomic behind-the-meter investments.
The regulated distribution companies are hesitant to embrace the new DER realities and so are the regulators, with a few exceptions.
The author examines the trends, the challenges, and some of the solutions based on evidence from several key markets where the problem has grown to the point where the DER "tail" is wagging the "dog" -- not the other way around.
This phenomenon is already present in jurisdictions with sunny climate, high retail electricity prices and high percentage of customers living in suburbs in detached homes. In most case, heavy air conditioning load is strongly correlated with solar generation. Examples include Queensland and South Australia, California and Hawaii where millions of customers have already made investments in small-scale hybrid solar + battery + EV systems. In most cases, these prosumagers can drastically reduce their net electricity purchases from the distribution network. Empirical evidence from California, for example, suggests that the kWh purchased from the distribution utility could go from 12,000 kWh per year to below 1,000 kWh -- with devastating implications for utility revenues.
Belatedly, the regulators have awaken to the challenges that these trends pose while also -- slowly -- recognizing the value that distributed small-scale hybrid systems offer to the grid if the systems are properly managed and integrated into utility operations, planning as well as grid operations.
Slowly, the thinking is changing to acknowledge all distributed energy resources (DERs) as a positive complement to an increasingly electrified, decentralized and intelligent "ecosystem" where customers are at the center with the "bulk power system" built around their service needs. In such a "bottom-up" ecosystem, customers are encouraged and enabled to take advantage of cost-effective opportunities "behind-the-meter" as they see fit while the network is re-configured to meet their "residual" needs, such as balancing service, providing reliability and back up when required. The remaining customers can continue t receive full services as before with the tariffs adjusted to avoid cost shifting and/or uneconomic behind-the-meter investments.
The regulated distribution companies are hesitant to embrace the new DER realities and so are the regulators, with a few exceptions.
The author examines the trends, the challenges, and some of the solutions based on evidence from several key markets where the problem has grown to the point where the DER "tail" is wagging the "dog" -- not the other way around.