The following is a contributed article on Utility Dive by Ronald DiFelice, managing partner at Energy Intelligence Partners.
View the article on the Utility Drive website.
In many electric utility markets, policymakers are exploring the next generation of renewable energy policies that will deliver the most value given the new reality of low-cost solar PV, wind and energy storage. Policies that encourage energy storage to be paired with solar or wind generation can have an outsized impact because these grid assets can together deliver firm capacity into peak periods when customer costs are the highest. If implemented effectively, the results are lower costs for ratepayers, increased resiliency and reduced emissions.
Ron DiFelice of EIP has been asked to join the NCSEA Board of Directors for 2019
The NC Sustainable Energy Association (NCSEA) is a 501(c)3 non-profit advocacy organization that drives policy and market development to create clean energy jobs, economic opportunities and affordable energy. NCSEA has served as a respected, trusted and collaborative resource to North Carolina and beyond since 1978. Our goal is to cultivate a robust clean energy ecosystem that unifies and benefits all its stakeholders: consumers, businesses, the clean energy industry and utility energy providers.
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Taking a Stake in Energy Storage: What to Expect from Today’s Business Strategies
Published by: Inside Renewable Energy
14 min 30 sec
Listen to the Renewable Energy World podcast with Ron DiFelice of Energy Intelligence Partners discuss the challenges and opportunities of entering the energy storage market into perspective for businesses interested in everything from energy markets to big solar plus storage pairings.
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“Grid Defection,” a term popularized by the Rocky Mount Institute in their report Economics of Grid Defection, has caused some trepidation among utilities executives taking a long-term look at their industry. However, little has materialized to date that gives reason for major concern. Instead, we are starting to see some selective defection during certain points of the day, specifically among non-residential customers. A term for this more near-term threat might be “Peak Defection.” Driving this movement are the improving economics of large scale energy storage, more sophisticated energy management systems, and legacy tariff structures. An additional tailwind is that intermittent renewables and energy efficiency measures are further driving up peak prices in many areas of the US (EIA).
Why is this phenomenon important? One reason is that uncoordinated Peak Defection could cause more problems for the grid and make an efficient distributed energy future harder to obtain. Another reason is that a lot of utility revenue is at stake, and tough changes to how they recoup that revenue may be necessary. However, if regulators and utilities work with their large customers to the benefit of both parties, Peak Defection can both lower power costs and increase grid stability.
As energy storage solutions continue to decline in cost, it is largely inevitable that distributed energy resources (DERs) will be a critical part of the future electricity grid. In the residential markets, U.S. utilities were slow to embrace the opportunity presented by rooftop solar. They now have a chance to shape the unfolding DER evolution with energy storage. Instead of ignoring or fighting the transition, utilities need to proactively find ways to lead the deployment of these new grid resources for their most vocal and visible customer base: residential customers.
Current DER market traction is largely a result of entrepreneurs and capitalists addressing electricity market inefficiencies. It started with behind-the-meter solar addressing high retail rates. Now energy storage can further decrease customer costs by optimizing behind-the-meter assets and consumption for local tariffs. As with solar, many utilities view this as a challenge to their business. But DERs have been proven to provide valuable benefits to utilities, operators, and the larger grid if planned and coordinated by the grid operator at the distribution level. These benefits include load shaping through additional supply-side and demand-side resources, improved grid resiliency, reduced emissions, and lower cost ancillary services. Indeed, utilities would likely be embracing DERs if frameworks were in place for them to share in — and get compensated for — the benefits DERs provide.