INNOVATIVE SOLUTIONS FOR CUSTOMERS

Utility Innovation

INNOVATIVE SOLUTIONS FOR CUSTOMERS

Jim Coyne

Concentric Energy Advisors

CAMPUT Annual Conference

Wednesday, May 10, 2017

Concentric Energy Advisors, Inc.

The Utility Industry is Entering a Critical Period

Challenges

• Aging infrastructure and workforce

• Diminished customer tolerance of outages

• Disruptive technologies

(DG, Microgrids)

• Information security and privacy needs

• Climate change

Opportunities

• New services and products

• Customer empowerment and choice

• Improved resilience

• Lower energy costs

• Cleaner energy

2


Utility role:

Proposing innovation

portfolio

Regulator role:

Guidance, oversight,

and cost recovery

Shared role:

Stakeholder engagement,

customer education,

performance

measurement

Creating An Emerging Alignment of Interests

Upward cost pressures must be met by utility

and regulatory solutions that mitigate total

energy bills, enhance reliability, and promote

environmental sustainability

Utilities and regulators will both be held to a

higher standard

This will require both technology and process innovation

3

Principles of innovation

CONCENTRIC ENERGY ADVISORS 4

Source: Energy Research Partnership, UK Energy Innovation, 2007, at 2.


Impediments to Utility Innovation

5

Market

Lack of customer

awareness and

interest

Economics of scale

Weak vendor

distribution channels

Spillover benefits and

externalities

Industry

Issues of culture and

core competencies at

utilities

Utilities do not

compete with one

another

Focus on safety and

reliability promote

conservatism

Policy/Regulatory

Relatively limited

shareholder returns

(limited upside)

Mismatch between

relatively low-risk,

conservative business

and regulatory model

and the much higher

risk profile associated

with innovation


Our research has

identified an

international array of

programs designed to

stimulate innovation for

the benefit of electric and

gas consumers:

• Governmental programs

• Industry programs

• Regulatory reforms

• Utility-funded programs

6

Research


Examples of Utility Innovation

7

Electricity• Intelligent Buildings (EPRI)

• Advanced Clean Power

(NYSERDA)

Natural Gas• Conversion of Biomass

Feedstock to Biogas

(CanmetEnergy with CGA,

et al.)

Research & Development

Demonstration Deployment

Electricity• Electricity Storage – IESO

Ancillary Services and

Other (SDTC, NRCan,

NYSERDA)

Natural Gas• High-Efficiency Water

Heaters (ETIC with NGTC

and NRCan)

• Power to Gas (H2)

Demonstration Pilot

(ETIC, Enbridge, et al.)

Electricity• Distributed Solar

(Ontario Feed-in-Tariff)

• Vulnerable Customer

Energy Efficiency

(London Power Networks)

• Electric Vehicles (ecoEnergy

Technology)

Natural Gas• High Efficiency Water

Heating Incentives

(Union Gas)

• End-Use Technologies

(CGA and SDTC)

GMP Solar Microgrid



GMP Solar Microgrid

Description:

•Stafford Hill Solar Farm

•Solar + storage microgrid: 4 MW batteries + 2

MW PV microgrid

•First in the region to use battery storage to

reduce peak power usage, benefiting customers

through reduction in peak load costs

•According to the DOE, it was also the first

project to establish a microgrid powered solely

by solar and battery backup

Funding:

•Project Cost of $10.8 M, with $285,000 funded

by the State of Vermont, U.S. DOE’s Office of

Electricity, and the Energy Storage Technology

Advancement Partnership (ESTAP).

Status:

•Operational, 2016

Commercial Relationships:

•Dynapower - engineering and procurement

services for the power systems technology,

and secured bid to procure the most cost-

effective battery storage technology

•GroSolar - winning bidder on the solar

installation, and responsible for integrating

solar, power electronics and the inverter


GMP “Off-grid” Customer Package

Source: Green Mountain Power


GMP “Off-grid” Customer Package

Description:

•GMP is offering a combination of efficiency

upgrades, solar, batteries, home energy

management and backup generators to customers

to assist them in going “off-grid”

Funding:

•GMP proposes to recover its fixed costs, plus

a small margin that will flow back to the rest

of its customer base.

•Customers pay the utility a monthly fee

•$400 - $850 for homes with an average

monthly energy consumption between 400

and 800 kilowatt-hours

Status:

•6 participants targeted for the first phase of

pilot); first commercial customer in 2017

“Josh Castonguay, Chief Innovation

Executive at GMP said that the company

looked internally and asked itself what

the GMP of the future would look like “as

we decline other traditional sources of

revenue [and start] moving toward a

much more distributed generation world.”Commercial Relationships:•Peck Power – first installations

•OutBack Power – control systems

•Aquion Energy and Tesla Powerwall -

batteries


ConEd/NRG Deployable Storage Project

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ConEd/NRG Deployable Storage Project

Project Description:

•Con Edison proposes partner with NRG Energy to

develop and construct the Queens Energy Storage

Terminal at NRG’s existing Astoria Generating

Station.

•1MW/4MWh Project with 2 mobile battery

trailers and 1 mobile electrical switchgear trailer

Funding:

•ConEd will pay for the capital cost of the storage

assets

•ConEd does not anticipate that the total revenue

realized during the demonstration period

($1.4M) will exceed total demonstration costs

($7.6M)

•This is due in part to Con Edison’s desire for

flexibility to test and iterate on several

monetization strategies within the

demonstration

Status:

•Proposed 2017, subject to PSC approval


•LG Chem and Greensmith – design & build

•NRG – storage, operations & maintenance

NY REV Demo Projects Background:

•Projects intended to demonstrate new business

models and new revenue stream opportunities

for third parties and utilities

• Intended to test new technology and

approaches to assess value, explore options, and

stimulate innovation before committing to full-

scale implementation


SCE & GE Hybrid Peaker

From Current, GE and SCE 2016 Storage Procurement Plan


SCE & GE Hybrid Peaker

Description:

•2 - LM6000 Hybrid EGTs, which allows the turbine

to operate in standby-mode without using fuel

•Combines 10 MW of energy storage enabling

immediate response to changing energy dispatch

needs

•First-of-its-kind project to combine existing gas

turbines with a battery storage system

•GE is looking at the two plants as an initial test run

of a hybrid energy technology stack that could fit

into other markets with similar wind and solar

power characteristics

•Project responds to the Energy Storage Mandate

and the CPUC Order calling on SCE to use storage as

an alternative solution to the Aliso Canyon gas

storage facility

Funding:

•SCE will recover costs through rates

Status:

•Deployed (Operating since March 2017)


•Current/GE

CONCLUSIONS

Principles for Utility Innovation Funding


• Utility innovation efforts and customer funding should be allocated

to the roles utilities are most strategically positioned to fill

• Utilities are uniquely positioned to drive innovation activities that

require testing or demonstrations of new technologies on utility

networks or with utility customers

• Innovation is not mutually exclusive – utilities, vendors, industry

and governmental agencies, and customers all have a role to play;

partnership should be encouraged

• Regulatory support is key – to accelerate technology deployment

where a reasonable promise of benefits for customers exists

Documents

INNOVATIVE SOLUTIONS FOR CUSTOMERS