An Ignoble Experiment

2. SB 1414 corrects DR oversight

The rise in distributed energy in the United States threatens the business model upon which the power and utility sector has been built, according to Ernst & Young (EY). The power and utility industry must shift from its defensive posture regarding distributed energy resources (DER) and go on the offensive to lead the revolution.

"The critical success factor for U.S. electric utilities will be changed behaviors. Utilities have to have the capabilities and the mindset that says, 'we want to compete, not just defend the status quo,'" said Dean Maschoff, executive director, Ernst & Young LLP, and one of the authors of the report.

The value for DER in the form of distributed solar PV systems has never been more attractive, and utilities will increasingly feel the impact on profitability as customers adopt the new technology. There is no "one size fits all" solution, but there are imperatives that will help utilities survive and thrive, according to EY.

Position the utility to compete. Utility leadership teams need to design and commit to a transformation roadmap that will create a more efficient and effective utility operating model -- one that will be able to offer new products and services and compete against new entrants.
Transform the grid. As DER grows as a market force, the grid must evolve into a more distributed, digital and dynamic system that provides two-way communication between customer locations and the utility.
Manage the transition. Utilities need to take actions that seek full cost recovery of legacy assets to recover investments made and costs incurred in a pre-DER world.
Focus on the customer. To maximize the benefits of a pro-DER strategy, utilities need to increase their customer knowledge and the range of their offerings.
Innovate and accelerate. Utilities should adopt a business model that can adapt to changing conditions -- one that captures and provides value in connection with distributed energy.

For more:
- see this report

Read more about: Ernst & Young
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By Barbara Vergetis Lundin

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3. DOE guidelines to strengthen energy cybersecurity

California Senate Bill 1414 has moved out of committee and onto a clear path to save Californians energy and money. The bill would ensure that state regulators and utilities use demand response (DR) programs to lower electricity bills, improve air quality, and enhance electric grid reliability.

Demand response programs and energy efficiency are at the top of California's loading order, which requires utilities to plan to procure all available cost-effective, reliable, and available energy efficiency, DR, and renewables before conventional power plants, the Clean Coalition stated in a letter supporting the bill.

However, when planning to make investments to meet electrical demand requirements in their Resource Adequacy studies, utilities are only required to plan out investments in generation. SB 1414 corrects this oversight and requires that utilities also plan for meeting system needs with DR.

Demand response is an innovative tool used by utilities to reward people who use less electricity during times of peak (or high) energy demand, when power plants are pushed to their limits and struggle to supply enough electricity. With lower demand, utilities have less need for "peaker" power plants, which are commonly used only to generate power several dozen hours per year and one of the state's most expensive and least efficient electrical generating resources. With reduced demand easing stress on existing power plants, demand response in turn reduces the need to build new costly and dirty fossil fuel power plants.

SB 1414 will elevate the role that demand response will play in resource planning, requiring investor-owned utilities to consider it in their resource planning, leading to a more competitive and economically efficient electric market.

"SB 1414 is a win-win for clean energy in California. It saves consumers money, increases the use of clean, renewable energy and reduces harmful emissions and other pollutants by empowering people, rather than power plants, to meet energy demand," said Lauren Navarro, Attorney and California Senior Manager of Clean Energy for the Environmental Defense Fund. "This bill highlights the vital role that demand response can play in our state's clean energy future."

For more:
- see the bill
- see this fact sheet

Read more about: demand response
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By Barbara Vergetis Lundin

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4. ADR extending reach into smarter grid

New guidelines to assist the United States in strengthening the cybersecurity of its energy delivery system have been developed through a public-private working group including federal agencies and private industry leaders. Known as the Energy Department's Cybersecurity Procurement Language for Energy Delivery Systems, it provides strategies and suggested language to help the U.S. energy sector and technology suppliers build in cybersecurity protections during product design and manufacturing.

"As we deploy advanced technologies to make the U.S. power grid more reliable and resilient, we must simultaneously advance cybersecurity protections," said Energy Secretary Ernest Moniz. "The cybersecurity guidance… will help industry further strengthen these technologies and protect our critical energy infrastructure."

Cybersecurity Procurement Language for Energy Delivery Systems guides the energy sector in defining cybersecurity requirements for suppliers to follow when providing new energy delivery technologies, focusing on the procurement of energy delivery systems to ensure that organizations purchasing and supplying such technologies make cybersecurity an integral requirement throughout the testing, manufacturing, delivery, installation and support phases of the product life cycle. This approach will help reduce cyber risks and improve the reliability of the energy delivery system.

"The electric utility industry continues to build upon our key partnership with the Department of Energy, and this collaborative effort is another great example of how our industry-government partnership is helping to strengthen grid security and resilience," said EEI President Tom Kuhn. "This guidance will further the discussion of cybersecurity requirements between industry operators and suppliers during the procurement process to help build cybersecurity protections into the nation's evolving energy infrastructure."

As part of the Energy Department's broader security and resiliency efforts, the department is working with grid owners and operators, national laboratories, universities and other federal agencies to share best practices and deploy new technologies.

The DOE is also developing tools to help grid owners and operators become aware of unusual activity as soon as possible, enabling faster and more effective responses. In 2013, the Cybersecurity Risk Information Sharing Program was launched to provide electricity sector organizations with near-real-time cyber threat information and analysis. Since then, eight organizations have installed a DOE-developed information sharing device, which provides continuous monitoring and helps quickly identify potential threats and mitigation tactics with 20 new organizations expected to join the program this year.

For more:
- see this report

Read more about: U.S. Department of Energy
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By Barbara Vergetis Lundin

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5. Ecuador building and expanding transmission

Demand response (DR) is becoming a growing part of the resource base that electric system operators rely on to maintain reliability on the grid. Automated demand response (ADR), which automates the DR dispatch process without any manual intervention, enables more flexible and faster responding resources to help balance intermittent loads from distributed energy resources. The changing resource mix in electric grids, along with the drive to bring DR to smaller facilities and the opening up of new markets, such as ancillary services, is also creating more potential for ADR to play a pivotal role in the smarter grid, according to Navigant Research.

Navigant predicts that spending on ADR deployments will grow from $13 million worldwide in 2014 to $185.5 million by 2023.

"Demand response is a growing part of the resource base that electric system operators use to maintain grid reliability, and automated DR greatly extends the reach and capability of the technology," said Brett Feldman, senior research analyst with Navigant Research. "Much of the basic technology for ADR exists today, and to a large extent, ADR adoption will depend more on market forces than on technical advances."

However, technical innovation is the future, and advanced technologies can help speed this transition and make it more reliable, according to the report. At least one ADR product now available for the commercial and industrial market requires that no hardware be installed at the customer site. Similarly, in the residential space, software-as-a-service (SaaS) offerings for DR management systems offer lower investment requirements, fewer systems that must be integrated and faster deployment times.

For more:
- see this report

Read more about: demand response
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By Barbara Vergetis Lundin

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