Non-Transmission Alternatives (Distributed Generation, Energy Efficiency) Take Spotlight At NARUC Conference
A consultant from Synapse Energy Economics, Doug Hurley, tells the National Association of Regulatory Utility Commissioners (NARUC) “that cost alone will drive the power industry toward “non-transmission alternatives” (NTAs).” NTAs include all forms of distributed generation plus energy efficiency. The FERC Chairman and state commissioners recognize regulatory rules do not give economically correct signals, and instead favor the existing paradigm.
That’s getting pushback from traditional transmission suppliers who see themselves left providing the backup power for consumers who expect to pay little each month but be able to turn to the grid on the hottest summer days or during blizzards.
Speakers said major transmission providers are already asking state regulators to require users with larger on-site generation capacity to pay grid stand-by charges. They also worry large new investment in transmission lines may end up being stranded as more areas find ways to meet their electric needs with NTAs.
- Stranded, expensive, new transmission? Quite possibly unless there is some new killer use for large amounts of electricity. Electric vehicles?
- Large users to pay stand-by or even exit fees? They already do; demand charges and, if they are really big, explict exit fees or implicit exit fees through contractual arrangements. The only question is how far and how fast utilities try to go downmarket.
- Would they charge small residential customers, too? How big is big? Here I think you have to count the votes, literally. Residential and small C&I customers are seen as real people and they vote or affect votes. Larger C&I customers are seen as corporations, not “real” people. A regulatory agency could probably get away with fees for users the public perceives as “big”, but not anyone else.
- What does this mean for new central station power plants? See item #1, above. They are not going away any time soon, but absent a new killer app that spurs electricity demand, they will face a declining market.
- What about storage? If site size storage with adequate carryover is available, consumers will consider disconnecting from the grid, especially if there are significant standby charges. What would NJ and NY residents be willing to pay not to suffer week long outages from storms and not to worry about gasoline for their generators? We are talking about a lot of storage; 10 days of normal usage, which would last longer if conserved. That is still about 200 kWh after new energy efficiency measures (current household use average around 900 kWh per month nationally).
I think this is just the beginning of the awakening to disruption from alternative energy, especially to entrenched utility interests.