Published on April 8th, 2014 | by Rocky Mountain Institute0
eLab Accelerator: New Approaches On Utility Business Models and Regulation (Part 2)
April 8th, 2014 by Rocky Mountain Institute
Originally published on Rocky Mountain Institute.
By Rebecca Cole
In this second installment of our eLab Accelerator blog series (read part 1), we are exploring how companies, organizations, states, and communities are working to evolve utility business models, rate structures, and regulatory structures so that renewable and distributed resources can be reliably and economically integrated into the energy system.
This change is critical—yet is ripe for new thinking and acceleration. Regulations governing renewables, efficiency, and other distributed energy resources are being reevaluated; friction between renewable companies, utilities, and customers is emerging; and regulators and grid operators are seeking solutions to reliably and cost-effectively integrate ever-higher levels of distributed energy resources into the system.
These five teams are looking for new approaches to cut through current gridlock and develop real, practical solutions. Not easy work, but it is critically important, and we applaud the teams for participating in eLab Accelerator to tackle these complex and gnarly issues.
HAWAII BUSINESS MODEL INNOVATION
Hawaii is currently experiencing transformational growth in distributed solar deployment, helping the state achieve its 40 percent renewable portfolio standard by 2030. Hawaii is leading the nation in the growth rate of solar PV installation; as of mid-2013, more than 18 percent of electricity comes from renewable resources, exceeding the state’s goal of 15 percent.
Due to this rapid growth, along with efficiency-driven flat or declining loads and needed infrastructure investments, Hawaii’s electricity system is at a critical inflection point with mounting pressure on the vertically integrated utility’s existing business model. In order to sustain Hawaii’s rapid progress towards its clean energy goals, key stakeholders in Hawaii need to evolve utility business models and pricing structures.
Key issues the team will tackle this week include:
- Begin to create a shared long-term vision of Hawaii’s electricity system
- Understand the potential role of the utility and other service providers in that vision
- Start to consider needed regulatory and business model changes
MINNESOTA E21 INITIATIVE
The e21 Initiative aims to develop a new or adapted regulatory framework that addresses the challenges of the energy transformation while also taking advantage of opportunities presented. The e21 Initiative is working with key Minnesota stakeholders to launch an action-oriented process to identify specific, practical steps for better aligning utility business strategies and regulatory incentives to address changing industry trends and opportunities. The project goals for e21 were developed in consultation with key interests in Minnesota including MN PUC commissioners and staff, the governor’s office, department of commerce officials, legislative leaders, and others.
Key issues the team will tackle:
- Have the right set of questions been identified for e21 to tackle and how can blind spots be addressed?
- What utility services are provided now and in the future and what is the role of the utility?
- What does success look like and what possible solutions should be considered?
ILLINOIS DISTRIBUTED ENERGY ADOPTION
Over the next five to seven years, advanced smart grid infrastructure will be rolled out to utility customers in Illinois (just under 5 million total meters). As advanced metering and electricity infrastructure is rolled-out, attention is needed to develop the business models and key partnerships that can leverage opportunities and create a robust smart grid ecosystem.
Key issues the team will tackle:
- Collaboratively develop strategic plans for maximizing opportunities, including coordination between state and RTO-based markets
- Develop business models and customer outreach plans for energy efficiency, demand response, and dynamic pricing programs
SAN DIEGO GAS & ELECTRIC PRICING EVOLUTION
Distributed energy resources are growing rapidly in California. As this growth continues, there is an escalating need to accurately reflect the costs and benefits of grid services and customer-sited resources, as well as to find additional sources of grid flexibility. SDG&E has been a leader in articulating a vision of transitioning rate structures to accurately reflect the costs and benefits of grid services and distributed energy resources. One recent example was SDG&E’s proposal for a “network use charge” in 2011. Today, SDG&E is currently developing rate proposals to significantly expand utilization of time-of-use pricing options by its customers.
Key issues the team will tackle:
- What do recent California legislation and regulatory rulings suggest for the direction of electricity pricing?
- What do key stakeholders (including utilities, customers, entrepreneurs and the environment) require from electricity rate design now and in the future?
- How can stakeholders effectively collaborate to leverage opportunities afforded by new time-of-use rate designs?
BOULDER, COLORADO: UTILITY SERVICE MODEL
In 2011, citizens of Boulder, Colorado, passed a ballot measure directing their city government to explore options that could deliver clean, reliable, and affordable local energy. Among the options under consideration is the possibility of leaving the investor-owned utility that currently serves Boulder and forming a city-owned municipal utility. As the analysis of municipalization has progressed, Boulder’s discussion of localization evolved into a focus on “the utility of the future”—a vision of a different utility business model that provides energy as a service, helping customers use less energy, manage energy more efficiently, and even generate their own local energy.
Key issues the team is tackling this week:
- What are emerging best practices for rate design and utility services to achieve Boulder’s energy goals?
- What are customers’ expectations for energy supply and energy needs?
- What opportunities exist and what challenges must be overcome?
- How can the city, the community, and other stakeholders effectively partner on next steps?
Follow news about eLab Accelerator, the teams, and the projects on Twitter using #eLabAccelerator.
First image courtesy of Shutterstock. All other images courtesy of the author.
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