Some Thoughts on Our Energy Future(s) ~In Pictures~

NW Energy CoalitionNW Clean & Affordable Energy Conference

Comments of Ron BinzPublic Policy Consulting

November 8, 2013 Seattle, WA

Public Policy Consulting

www.rbinz.com

Pressures on the Utility Model

• New environmental regulations• Investment requirements• Flat load growth• Shifting fuel economics• Upward pressure on rates• Distributed energy resources• Falling cost of alternative resources

=

WECC (2032): Potential Bypass Threats from Distributed Generation are Large

• WECC-wide Behind-the-Meter DG: 19 GW of solar PV + 7 GW of CHP• Distributed PV based on “interconnection potential” (no back-flow through

feeders), with adjustments to reflect relative economics among states• CHP additions represent a fixed percentage (~40%) of technical potential in

each state

0%

5%

10%

15%

20%

25%

30%

AB AZ BC CA CO ID MT MX NV NM OR UT WA WY

CHP Solar PV Customer-Sited DG Additions in WECC High DSM Case(Percent of Peak Demand)

Source: E3 (2013).

NREL’s estimate of continued cost reductions for wind energy

Oregon

Colorado New Jersey GermanyArizonaWashington

Renewable Electricity Futures Study (REF)

Exploration of High-PenetrationRenewable Electricity Futures

Available at NREL.gov

Baseline Case

REF ITI Case

How does the assumption of an HREF affect the business model?

Much higher levels of variable generation at the bulk power scale

Greater penetration of distributed energy resources at the distribution scale

Greater need for flexibility in the grid components, operations, and architecture

Much higher levels of energy efficiency (sufficient to eliminate load growth)

(affects utility organization, operations)

(affects utility revenues, services)

(affects utility investment, operations)

(affects utility role, services)

• Thesis: Utilities must develop a set of new business models

• Thesis: Today’s regulation may not be up to the task– Rarely rewards utilities for desired behavior– Lack of incentives for

• firm efficiency• clean energy investment• energy efficiency• innovation

– Rate structures need revision– Focus on commodity sales– Balky, judicial process

• Authors– Ron Binz

– Richard Sedano

– Denise Furey

– Dan Mullen

Available at www.ceres.org

The Final Word

111(d)

Thank You

Ron Binz

Public Policy Consulting

rbinz@rbinz.com