An Ignoble Experiment

2. Some states pulling back from energy efficiency despite success

Microgrids, which can operate in isolation from (or in the absence of) the wider power grid, have begun to move into the mainstream globally, with new vendors entering the market with new projects and technologies. Well-suited for remote communities in the developing world, where regional and national power grids are often weak or nonexistent, there are now more than 388 remote microgrid projects in operation, under development, or proposed worldwide. That number is almost as many as all other segments combined, according to Navigant Research, who has been tracking these projects.

In terms of capacity, however, the market is now led by the community/utility segment, with a total capacity of 1,111 MW as of the first quarter of 2014, according to the report.

"While remote microgrids are proliferating rapidly, they tend to be quite small, often below 100 kilowatts in size," said Peter Asmus, principal research analyst with Navigant Research. "Community and utility microgrids, which include projects being developed by the grid operators themselves, can be as large as 60 or even 100 MW per system."

Nearly half of the microgrid projects included in the report are in North America -- the global leader in terms of total microgrid capacity, with a more robust microgrid market than in 2009, the research shows.

Navigant has identified a total of 4,393 MW of microgrid capacity throughout the world in the first quarter of 2014 -- up from 4,148 MW in the fourth quarter of 2013.

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By Barbara Vergetis Lundin

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3. Exelon calls for energy reform

In 2012, more than half of U.S. states met their energy efficiency targets, with most states meeting or exceeding their goals. This is according to new research by the American Council for an Energy-Efficient Economy (ACEEE). Implementing energy efficiency programs can save utilities money by eliminating the need to build more power plants.

In 1999, Texas was the first set efficiency targets, specifically an energy efficiency resource standard (EERS). Since then, half of the states in the country have followed have also set long-term targets. These policies have prompted utilities to invest in energy efficiency programs ranging from appliance rebates to whole building retrofits.

For example, in Arkansas, utilities worked with customers to replace water heaters, weatherize homes, and find energy savings for poultry producers. In Wisconsin, Focus on Energy programs have helped residents and businesses achieve more than $730 million in savings by replacing refrigerators, offering incentives for energy-efficient heating, and conducting free energy assessments for small businesses.

Utilities in these states say that energy-efficiency targets are too expensive to implement, despite a landscape of EERS policies that are providing cost-effective energy savings in Arizona, Arkansas, California, Colorado, Connecticut, Hawaii, Iowa, Illinois, Indiana, Massachusetts, Maryland, Maine, Michigan, Minnesota, New Mexico, New York, Ohio, Oregon, Pennsylvania, Rhode Island, Texas, Vermont, Washington, Wisconsin, North Carolina, and Nevada. Due to the resistance, energy efficiency programs have stalled in the remaining states.

In Indiana, for example, legislators recently passed a bill ending energy efficiency programs that had been established by a prior regulatory commission order, eliminating the state's EERS. In Ohio, state lawmakers are considering legislation that would freeze the state's energy efficiency targets.

ACEEE research has found that programs to reduce energy waste cost utilities less than three cents per kilowatt hour. Generating the same amount of electricity from fossil fuels can cost two to three times more.

"Opponents of energy efficiency savings targets ignore the costs of building expensive new power plants, which are paid for through charges on utility bills," said ACEEE senior fellow Martin Kushler. "Because saving energy through efficiency improvements is much cheaper than building a new power plant, energy efficiency programs end up resulting in lower utility bills for customers."

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By Barbara Vergetis Lundin

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4. Devastating storm results in positive outcome

Exelon is calling for energy policy and market reforms in order to ensure a clean and reliable energy supply. The energy industry has experienced large shifts in how energy is produced and consumed, with an influx of low-cost natural gas, rapid expansion of subsidized renewable generation, smart grid deployment, behind-the-meter technologies and low demand growth reshaping the energy landscape. Market rules have to keep up with that evolution, Exelon contends.

Competitive market rules and state and federal energy policies need immediate reforms to ensure a diverse, clean, reliable, and affordable energy supply, Exelon Generation President and CEO Kenneth W. Cornew said at the recent Platts Global Power Markets Conference.

"Rules that are in place today were designed for a fundamentally different energy market," Cornew said. "They need to be reformed to reflect our current environment and recent changes in how we produce and use energy."

Unpredictable winter weather and surge in energy demand exemplify the urgent need for reforms, as grid operators struggle to keep up with demand. Many resources had high forced outage rates or were otherwise unable to perform. A large number of natural gas plants across the country were unable to get access to fuel, highlighting the consequences of an overreliance on gas generation.

"The extreme cold highlighted…that a diverse fleet of generation that includes high-performing baseload power plants that have firm fuel, such as nuclear, is critical to grid reliability," Cornew said.

However, Cornew said, flawed market rules and the current patchwork of state and federal energy policies subsidizing renewable energy do not properly compensate nuclear for its reliability and 24/7 emissions-free energy.

Cornew added that the combination of competitive market forces and artificial price suppression resulting from well-intended, but poorly designed, energy policies could force some highly-efficient nuclear plants to shut down, threatening grid reliability and setting back efforts to meet carbon reduction goals.

"The economic viability of these highly reliable, low-carbon generation sources is at risk, not because they can't compete in the marketplace, but because they can't compete when the playing field is uneven," he said. "We need to better align our energy policies with our competitive market rules to ensure we have a clean, reliable and economic energy supply going forward."

For more:
- see this report

Read more about: Exelon, energy market reform
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By Barbara Vergetis Lundin

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