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Electric Utilities Face A Disruptive Future

Electric Utilities Face A Disruptive Future

Cheap gas and oil aren't the only forces disrupting the U.S. electric system. Solar is already wreaking havoc, and large-scale batteries are looming.

What Uber and Lyft have done to the taxi industry worldwide is just beginning to happen to the electricity industry; and it could shock consumers – particularly the less affluent – as surely as though they had stuck their finger in an electrical outlet.

The disruptive revolution is not only happening here, but also in Europe, as Marc Boillot, senior vice president at Electricite de France (EDF), the giant French utility, writes in a new book.

Ironically, here in the United States, disruption of the otherwise peaceful world of electric generation and sale last year was a bumper one for electric stocks because of their tradition of paying dividends at a time when bond yields were low. Related: Drought Forcing Brazil To Turn To Gas

The first wave of disruption to electric generation has been a technology as benign as solar power units on rooftops, much favored by governments and by environmentalists as a green source of electricity. For the utilities, these rooftop generators are a threat to the integrity of the electrical grid. To counter this, utilities would like to see the self-generators pay more for the upkeep of the grid and the convenience it affords them.

Think of the grid as a series of spider webs built around utility companies serving particular population centers, and joined to each other so they can share electricity, depending on need and price.

Enter the self-generating homeowner, who by law is entitled to sell excess production back to the grid, or to buy on the grid when it is very cold or the sun isn’t shining, as at night. The system of selling back to the electric company is known as net metering.

Good deal? Yes, for the homeowner who can afford to install a unit or lease one from one of a growing number of companies that provide that service. Lousy deal for the full-time electricity customer who rents or lives in an apartment building.

There’s the rub: Who pays the cost of maintaining the grid while the rooftop entrepreneur uses it at will? Short answer: everyone else.

In reality, the poor get socked. Take Avenue A with big houses at one end and apartments and tenements at the other. The big houses -- with their solar panels and owners' morally superior smiles -- are being subsidized by the apartments and tenements. They have to pay to keep the grid viable, while the free-standing house – it doesn’t have to be a mansion -- gets a subsidy.

It's a thorny issue, akin to the person who can't use Uber or Lyft because he doesn’t have a credit card or a smartphone, and has to hope that traditional taxi service will survive. Related: Utilities Facing Coal Shortages Due To Rail Congestion

The electric utilities, from the behemoths to the smallest municipal distributor, see the solution in an equity fee for the self-generating customer's right to come on and off the grid, and for an appreciable difference between his selling and buying price. Solar proponents say, not fair: Solve your own problems. We are generating clean electricity and our presence is a national asset.

EDF's Boillot sees the solution in the utilities’ own technological leap forward: the so-called smart grid. This is the computerization of the grid so that it is more finely managed, waste is eliminated, and pricing structures for homes reflect the exact cost at the time of service. His advice was eagerly sought when he was in Washington recently, promoting his book, entitled “Advanced Smart Grids.”

While today’s solar may be a problem for the utilities, tomorrow’s may be more so. Homeowners who can afford it may be able to get off the grid altogether by using the battery in an all-electric car to tide them over during the sunless hours.

The industry is not taking this lying down: It's talking to the big solar firms, the regulators and, yes, to Elon Musk, founder of electric-car maker Tesla Motors. He may be the threat and he may be the savior; those all-electric cars will need a lot of charging, and stations for that are cropping up. There’s a ray of sunshine for the utilities, but it's quite a way off. Meanwhile, the rooftop disruption is here and now.

By Llewellyn King for Oilprice.com

Source - http://www.whchronicle.com/ 

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  • Pablo on January 28 2015 said:
    My message to the utilities companies

    Here is my message to the electric power companies:

    Please build at least two Interstate Transmission Corridors from Pacific to Atlantic (3 timezones difference), to transmit:
    1. Night energy;
    2. Day energy from the ongoing solar revolution;
    3. Wind energy from the wing corridor in the middle.

    Accept a world with a backbone generation that is less than your generation now and distributed generation. Be the conductor of the distributed generation. Tell us how to point our solar panels through hourly time-of-day rate. Transmit the excess power instead of building new dirty power plants. At the current flat rate everybody would point solar panels south, but I know that the peak demand is in a summer afternoon.

    You can charge us reasonable(!) fees on the distributed generation when it reaches a known in advance critical level. Right now my solar feeding back goes to the next door house and you sell it full price without having to transmit it from far away, which helps to reduce a peak load problem and completely cancels transmission losses, especially given that the losses a proportional to the current squired (Power loss=R*I*I, 10 times more current - 100 times more losses). The problem will come when half of the neighbors have solar panels, so you have to transmit to another city and to another time zone - then charge us reasonable fees, not punishable fees.

    One neighbor was very direct to me about his way of thinking.
    I told him that he could come to see our solar panels for electricity. He answered that he is not interested and at this price of the electricity he would not even consider changing windows.
    If some people are thinking like this, take at least the subsidies off from coal. Let them pay the real price and let them their freedom to continue thinking like this.

    The opponents to solar and distributed generation are silent about the advantage of giving power to the grid when the greed needs power the most - in a sunny summer day when every air conditioner is running. This is a symbiotic relation. The solar does not produce during the night when the grid has extra power anyway.
    They are also silent about saving transmission losses by distributing the generation. The society wins as a whole, if you consider all sides as one total and disregard one side interests.
    One has to look from all sides and balance the interests as a whole.
  • David Hrivnak on January 29 2015 said:
    We are VERY far from any type of issue here. So over the next few years if the Electric companies start to realistically split their bill into usage (generation costs) and grid (fixed) then solar users can morph into the new model. Then if the grid costs are too high they can go off grid.
  • John Scior on January 29 2015 said:
    Bottom line is the electric utilities don't want somone competing with their own production of electricity. In essence by putting so called "grid maintenance fees" the electric companies discourage the investment in solar panels or wind generators. Its a shame because they could work with consumers and help install solar panels and thus save themselves the cost of building a new power plant. Also it might foster wider adoption of Electric vehicles if people could feel good about producing some of their own electric power. Instead of looking at it as competing with customers as energy producers, they might consider the perspective of partnering with their consumer to compete against oil based transportation fuels. Two other points to bring p, in my state of Ohio, AEP has programs that subsidize electricity for poor citizens whereby they can pay based off their income instead of electrical use. while kind in spirit, it does not foster energy conservation. Who pays for that ? The rest of AEP's consumers, so you can't really say poor are being taken advantage of. Also, on my bill, there is a transmission charge separate from the electrical usage, doesn't that cover the cost for maintaining the line? So in reality the "grid fee" is a barrier to entry in the electricity market. An finally, tis smart grid crap is about getting more revenue for electric companies. Who believes that the electric company will cut you a break during off peak times, no in fact its merely a way for them to jack the rates up. Whatever the lowest cost for electricity is now will become the baseline cost around the clock and then they will begin charging you extra for electricity at "peak"times. And theres absolutely no way for you to tell when you actually are using electricity because its their meter and you have to take their word for it. It time for consumers to get off the grid, buy a co-generating furnace ( Honda makes them) , buy some solar panels and perhaps a back yard windmill and batteries. And if you are an investor, boy electric companies seem like a good investment.
  • Joe C on February 08 2015 said:
    Take all this in context, I've been in the electric industry for years, and have been in renewables for years. The potential is there, but it's not going to happen overnight. The issue is infrastructure. These disruptive technologies are trying to interface with an existing infrastructure that was built in a different time, under different rules, for different purpose. Certainly many utilities are resisting, rather than encouraging, disruptive technologies, but the system is very complex, and highly regulated, so change is not as simple as some make it out to be.


    Disruptive technologies have always exist takes time to resolve into working system.

    The automobile, train, powered ships, etc were all disruptive technologies at one time. Some of the difference here is structural. When the railroads "invaded" virgin territory, they did so by building their own network of rails - they didn't co-opt an existing rail system that someone else built. The same with Cellular - they built their own network.

    The difference here is more akin to telephone systems. The disruptive electric technologies are trying to interface with a very complex infrastructure that already exists, was never designed for their use, has myriad problems of its own, etc. Much like early independent telephone providers, who were "renting" space on someone else's network.

    Currently, rooftop solar is rarely installed in such a manner that it is totally self sufficient, and therefore it is using the grid, someone else's infrastructure, as a giant battery - feeding excess energy in when possible, and pulling from the grid at night and on cloudy days. Larger, ground based, projects are a bit more realistic, in that they only get paid when generating, and aren't consuming anything material at night.

    Building cross country transmission systems is not an overnight happening. Permitting and local resistance takes years to overcome. Updating the grid to "mesh" with new technologies also takes years, and someone's going to have to pay for it all.
  • gf on February 25 2015 said:
    Obviously, this article was written by someone who didn't install solar panels. Power companies paid a rebate to help lessen the critical load on the grid system because they couldn't afford to build new power generating stations. The amount of money one get at the end of the year for selling power back to the power company, well lets say you if you cash it on a city bus, you would still need to reach into your pocket to pay for a ticket. During the summer solstice, the panels generates about 70% of the power one uses, in the winter solstice, it is only 20% and that's in Arizona. That a average of 45% saving minus the $100/month cleaning bill to wash the panels because a millimeter of dust reduces the charge by 50%...Save your money on solar panels, and just buy LED lights....you will save 80% off your lighting portion of your electrical bill every month without the huge investment....

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