I recently attended several conferences, including one in Germany, covering the same common theme: the shift from central station generation to distributed generation is happening quickly and it’s disruptive.
Germany, which several years ago committed to promoting renewable energy and eliminating nuclear and coal-fired power, is transitioning quicker than most. There’s debate about how much this transition has cost, but there’s little, if any, argument about the need to “green” electricity supply. Most Europeans (not just Germans) are onboard.
Few U.S. states are moving quicker than Germany, but some are moving fast, including California, which often sets the trends for the rest of the country.
In 2007, California’s Public Utility Commission authorized its first Community Choice Aggregation (CCA) applications. A UCLA press release describes a CCA as a utility that provides cities and counties the opportunity to choose the type of energy that fits their needs. They allow cities and counties to group individual customers’ purchasing power within a defined jurisdiction to buy energy. California law defines CCAs as electric service providers. They compete with investor-owned utilities and a main objective is to reduce CO2 by offering clean energy.
Today, 10 years after their creation, eight CCAs have been established in California and more than a dozen others are in the works.
A new report, released in July by the Center for Climate Protection, explains that “private utility load forecasts and the corresponding procurement decisions underestimated the number of customers leaving private utilities for CCAs, creating an over-procurement of power by private utilities.”
A February 2017 Los Angeles Times’ investigation predicted that traditional California utilities have contracted to purchase 21 percent more electricity than they’ll need in 2020-less than three years from now. The Center for Climate Protection report backs up the Times with its own prediction-by 2020, California’s CCAs will provide 116,229 GWh of electricity generation sales and its IOUs only 84,967 GWh.
Another study released on July 26 by the Energy Information Administration (EIA) reveals that U.S. residential electricity sales declined 9 percent between 2010 and 2016. Weather is a key driver of year-over-year fluctuations, however, the report says energy efficiency improvements and economic factors were a bigger contributor to the decline in per capita residential electricity sales. In addition, EIA said it has no way of knowing how much residential load is now being provided by small-scale solar PV.
These reports not only illustrate utilities’ need to drastically revamp their traditional business models to offer customers more than just kilowatt-hours, they uncover a problem some utilities will face when they must make good on their purchase agreements, even though they’ll have no buyers for all the electricity. In addition, because most CCA electricity comes from distributed renewable generation, grid owners and operators must make the technology strides necessary to integrate even more intermittent distributed generation.
I understand things are changing fast. Reports like these, however, stun me. My job is to provide the best information available to help you with your much harder role of ensuring your companies survive and thrive in the new energy world that is ahead. I assure you, I’m working hard at it.