The Regulatory Assistance Project 50 State Street, Suite 3Montpelier, VT 05602

Phone: 802-223-8199www.raponline.org

Big Changes Ahead:Impacts of a Changing

Utility Environment

Jim LazarRAP Senior Advisor

The Regulatory Assistance Project (RAP)

We are a global, non-profit team of energy experts.

We provide assistance to government officials on a broad range of energy and environmental issues.

2

What is Changing?

• Increase in variable renewables

• Rate Design

• Increased value to fast-response resources

• Increased value to storage

4

Here Comes the Sun!

5

Solar Costs Continue to Decline

6

Solar Installations Are Soaring

7

The California ISO “Duck Curve”:Increasing solar means steep afternoon ramping.

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Teaching the Duck to FlyTen Strategies to Align Loads and

Resources

1. Targeted energy

efficiency

2. Orient solar panels

3. Use solar thermal

with storage.

4. Manage electric

water heat

5. Require new large

air conditioners to

include storage

6. Retire older inflexible power

plants

7. Concentrate rates into “ramping”

hours

8. Deploy electricity storage in

targeted locations

9. Implement aggressive demand

response programs

10.Use inter-regional exchanges of

power

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Not every strategy will be applicable to every utility.

Teaching the Duck to Fly

Requesting Permission for Take-Off

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Utility System Benefits

These are most commonly considered by utilities.

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BUT:

- Most undervalue emission costs;- Many exclude or undervalue T&D benefits;- Most undervalue line losses and reserves;- Most exclude or undervalue risk benefits.

Participant Benefits

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Utilities seldom consider non-electricity participant benefits; these can be very significant.

- Affects consumer willingness to pay;

- If ignored, many cost-effective measures may be omitted from utility programs.

Societal Benefits

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Energy Efficiency

Water Efficiency

Renewable Energy

15

Johnson Controls

Changes in Rate Design

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• Fixed Charges: Going up.

• Demand Charges: Time-varying; Concentrated into fewer hours;

• Energy Charges: Time varying

• Real-Time Pricing: New opportunities

Opportunities / Challenges

Great value to peak-load reduction

Energy management systems

Automatic load shedding

On-site storage

Thermal (AC)

Pumping controls and schedulingElectricity (Batteries)

Low off-peak prices

Displace some thermal loads?

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Building EfficiencyManagement Systems

Lighting controls

Thermostat controls

Process energy controls

Dispatch of pumps

Dispatch of thermal storage

Dispatch of electricity storage

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Thermal Storage – Air Conditioning

Ice and Chilled Water Storage Systems

$.02 - $.05/kWh to turn night into day

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Thermal Storage – Air Conditioning

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Rooftop Air: Ice Bear

Central Chiller: CALMAC

Electricity Storage

Batteries: double-duty

• Battery Bank in UPS

• Electric Vehicles

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Battery

Grid-scale

Flywheel /

capacitor

Distributed /

demand-side

1000300100 3000 10000

100

1000

10000

10

CAES

Chilled Water /

Ice Thermal

Metal-air

Na-S

Flow

Lead-acid

Ni-CdEV

Li-ion

Zinc-air

H.P.

capacitors

H.P. flywheels

L.D. flywheels

L.D. capacitors

Cap

ital

co

st

pe

r u

nit

en

erg

y -

$/k

Wh

ou

tpu

t

Capital cost per unit power - $/kW

PSH

Thermal Storage Is Cheaper Than Electricity Storage

Thermal Energy Storage Is More Efficient Than Electricity Storage

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% o

f E

nerg

y I

np

ut

Reco

vere

d

0%

25%

50%

75%

100%

Compressed Air Pumped StorageHydro

Batteries atSubstations

Air Conditioning

Heat Rejection

Loss reduction

Fundamentals

Pumping Energy

Nearly all pumps operate between a low and high set point.

Pump Scheduling

Pump Dispatching

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Opportunities as Aggregators of System Flexibility Resources

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RAP Publications:Rate Design and Demand Response

• Dimensions of Demand Response

• Distributed Resource Distribution Credit Pilot Programs

• Distributed Resources and Electric System Reliability

• Distribution Costs Studies for Distributed Generation

• Charging for Distribution Utility Services: Issues in Rate Design

• Revenue Regulation and Decoupling

• Distribution System Cost Methodologies for Distributed Generation

• Standby Rates for Combined Heat and Power Systems

• Time-Varying and Dynamic Rate Design

• Rate Design Where AMI Has Not Been Fully Deployed

• Designing Distributed Generation Tariffs Well

• Coming 2015:

– MADRI Partial Service Tariffs – Q1 2015

– Rate Design for the Utility of the Future – Q2 2015

– Designing Standby Tariffs Q2 2015

About RAP

The Regulatory Assistance Project (RAP) is a global, non-profit team of experts that focuses on the long-term economic and environmental sustainability of the power and natural gas sectors. RAP has deep expertise in regulatory and market policies that:

Promote economic efficiency Protect the environment Ensure system reliability Allocate system benefits fairly among all consumers

Learn more about RAP at www.raponline.org

Jim Lazar, RAP Senior Advisor

jlazar@raponline.org