Market forces are precipitously changing the role of utilities. Private companies are offering customers more choices and control over their electricity through energy efficient products and services, demand management, self-generation like rooftop solar, smart electric vehicle chargers, and on-site storage. At the same time, the role of utility-scale wind and solar is growing, as costs have plummeted since 2010.
One year ago, the D.C. Circuit Court of Appeals decided to vacate FERC Order 745, holding that demand response could not be traded in wholesale energy markets. Now that the Supreme Court has held oral arguments in the appeal of the case and a final resolution is imminent, we contemplate how DR will fare and how the market might evolve.
If Charles Dickens were an energy analyst, he’d probably say the past ten years have been the best of times and the worst of times for wind power in America. Yet comparing the two regions with similar total installed wind capacity adds another twist to the story: the importance of good transmission planning.
Oftentimes, more can be learned about utilities’ top priorities by listening to shareholder earnings calls than regulatory proceedings. As with any investor-owned company, managers of investor-owned utilities are obligated to maximize shareholder value. So it pays when regulators can find ways to align shareholder value creation with the public interest. Enter performance-based regulation.
Renewable integration in the West has forced reconsideration of system operations, planning, and markets. In order to develop a bulk electric grid that will be resilient in a dynamic future, the manner in which the system is planned and operated and the means by which entities are compensated for the energy, power, ancillary services, and emissions reductions they provide will need to evolve.
Like other distributed energy resources (DERs), customer-owned distributed storage puts competitive pressure on utilities by reducing customers’ reliance on the grid. As costs of DERs come down, customers can afford to rely less and less on the grid for electricity service.
Policymakers used to operating, planning, regulating and legislating in an environment where capital deployment happens over the course of years and assets maintain their value over the course of decades need to adapt their practices to account for accelerating change and disruptive feedback loops.
Capacity markets intend to bridge the gap between revenues available from energy markets and the all-in cost of desired capacity. They offer commitments, still short-term relative to most investment timescales, to make fixed payments for the right to call on an energy resource when needed.
As low-cost renewables provide a growing share of the electricity, grid operations—and thus power markets, financial structures, and policies—must evolve. This article draws lessons from power contracts and markets about the evolving role of renewables from two different organized markets.
Energy efficiency is a big business. However, some are beginning to question whether money could be spent more wisely to achieve greater levels of efficiency. Now is the time for policymakers to take a hard look at how to scale-up energy efficiency cost-effectively.