Electricity Use Trends and Forecast

• The Energy Information Administration (EIA) projects growth in electricity use in the United States to remain below 1% for the foreseeable future
• All types of end-use demand declined, beginning in 2008
• Industrial end-use saw the greatest decrease of all sectors in 2009
• Residential saw an uptick in 2010 but has been declining since
• Commercial use has been the most stable but is still below pre-recession levels
• Direct energy use has increased in the years 2009–2012, possibly at the expense of other types of demand

In the Intermediate Term – Significant Coal Plant Retirements Will Occur

• Significant coal retirements are underway: Environmental regulations are increasing pressure on coal-fired generators to invest in new air quality controls or to retire (before year-end 2015); this capacity will largely be offset by new gas-based generation

Coal Retirements in WECC

Comments

• Of the proposed retirements between 2013–2018, the majority are slated to occur in the Mid-Atlantic and parts of the Midwest and South
• A total of 2530 MWs of coal is scheduled to be retired in WECC
• Coal retirements are not the primary driver of new transmission needs in WECC

Wind

Industry Trends

• WECC experienced the largest annual capacity increase of the NERC regional entities
  • Of the 13,129 MW of wind added in the U.S. in 2012, 3,918 MW were added in the WECC
  • Total WECC utility wind capacity as of 2012 was 18,327 MW
• At the end of 2012 there were 125 GWs of wind capacity in the interconnection queues in the US
• On a cumulative basis, Texas remained the leader among states, with 12,214 MWs installed at the end of 2012–more than twice as much as teh next-highest state (California, with 5,542 MWs)

Solar

Industry Trends

• In 2013, the U.S.’s cumulative installed solar capacity will surpass 10 GWs (utility scale + DG), with 4.4 GWs of PV and 912 MWs of concentrating solar power (CSP) installed so far in 2013
• There were 38 individual utility scale PV projects totaling 452 MWs completed in Q2 2013. All ten of the largest projects completed were installed in either California or Arizona

Technology Innovation and Reduction of Load

Improving Functionality: 

• Demand side management (DSM), DR, and EE programs have been around for a long time
• Emerging technologies are increasing the capability and reach of these programs
  • AMI enables direct control of customer devices during peak-load conditions and two-way communication about load reductions
  • DA is increasing the reliability and resiliency of the distribution grid
• Markets and aggregation of DR are creating a new “supply” source
• DR and EE programs can be used to reduce load and to defer expenditures on utility infrastructure

Technology Innovation and Customer Alternatives

Enabling customer alternatives: 

• Facilitated by Smart Grid, net metering policies, and subsidies, more and more distributed energy resources are being deployed
  • There are approximately 71,000 MWs of CHP on the grid today
  • As of 2012, there was 3.5 GWs of net metered projects on the grid; 80% were in five states (Source: SEPA)
• Microgrids are emerging as a viable option for commercial customers and are a substitute for generation, transmission, and distribution
  • Drivers for microgrid implementations include increased reliability, economics, and “green” alternatives
• As storage technologies mature, they will enable more customer-side resources

Microgrids: An Overview

Definition: A group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single-controllable entity with respect to the main grid

Distributed Generation

Observations

• Net metered systems are examined to understand trends in distributed generation
• Driven by strong deployment in a few states, the number of net metered customers continues to grow steadily
• In 2011, the residential sector accounted for 90% of net metered customers and 39% of net metered capacity; commercial customers accounted for 9% of net metered customers and 44% of net metered capacity
• California is a clear leader in net metered customers and capacity
• In 2011, Arizona ranked first in the sale of excess energy, and Massachusetts ranked a surprising second

Implications for Utility Business Models

Not all utilities will face the same pressures in the same time frame; they will focus on different types of infrastructure in the near term.

Where Will Utilities be Most Impacted? 

Contributing Factors

ScottMadden believes that several factors will contribute to a region’s attractiveness for alternative supply sources:

• Electricity Rates
• Net metering and interconnection policies
• Prevalence of and policy towards solar and third-party providers
• RPS carve outs for solar

Contributing Factor

Average Retail Electricity Prices (2012)

Net Metering

• 43 jurisdictions have net metering rules, which allow the sale to the local distribution utility of excess distributed generation output
• The ability to monetize this extra power provides additional financial benefits to distributed generation
• As shown, the Mid-Atlantic, California, and parts of the Mountain West have more distributed resource-friendly policies

Prospects for Distributed Resources

• Where jurisdictions are “better” on more factors (e.g., easier interconnection; third-party solar PPAs permitted; net metering; lower differential between utility-supplied power and installed solar PV), they scored higher on the map
• The states that scored highest are most likely to a significant influx of distributed resources

What Do These Changes Mean for Transmission?

Its Complicated…

System planning will become more complicated

• Regional differences will become more acute
• Transmission planning may need to consider the availability of different types of resources
• Load forecasting may change or need to become more granular
• Location and timing will matter more and more as the system is assessed

Operation of the grid requires more sophisticated visualization and tools

• Visualization of myriad of resources will become important in areas of high penetration
• Utilities, RTOs, and ISOs will need to consider these resources as they manage the real-time environment

Transmission owners and operators will have to work with many more parties to manage the grid

• The shifting business model has opened markets to new participants

In Summary

We are living in a world of: 

• Declining demand growth
• A shift away from coal
• A move towards renewables
• Increasingly distributed resources

We need to think hard about: 

• Meeting the reliability needs of the system with new participants and resources
• Integrating both large and small scale resources to ensure reliability