Bulk power and distribution systems will combine through new technologies, reverse the supply-demand equation and create a platform for competitive procurement.
FREMONT, CA: Customers' demand for distributed energy resources (DER) and decarbonization goals reshape electric utilities. Utilities are moving from forecasting demand and scheduling supply to forecasting supply and scheduling demand because of flexible customer demand. According to utility representatives and power system analysts, DER's flexibility will reduce customer costs and protect reliability by balancing the variability of renewable in a future utility.
Utilities can forecast supply, price energy appropriately, and adjust demand accordingly.
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Changing resources: Increasing the deployment of clean energy that reduces emissions results from US renewable energy and decarbonization goals and mandates. FERC's September 2021 Energy Infrastructure Update shows that utility-scale renewable accounted for over 87 percent of US generating capacity in the first nine months of 2021. The Energy Information Administration reports that renewable energy accounts for over 20 percent of US generation. Utilities-scale renewable generation is expected to rise to 23 percent of US power this year, displacing natural gas, coal, and nuclear power. Consumers and new resources are driving significant changes in the role of utilities as electricity providers.
The utilities are preparing: The Smart Electric Power Alliance reports that 51 major utilities have committed to achieving net zero emissions by 2050 because of state policies and customer demands. Utility companies recognize they must deal with new dynamics due to the shift in system resources toward more variable generation and distribution. Due to transport and building electrification, electricity demand and peak load will rise 60 percent and 40 percent, respectively, by 2045. Electrification with environmental benefits encourages even greater use of electricity. Electric utilities must invest in emerging technologies and resources to use electric resources and the grid more efficiently.
Change in a generation: It is no longer beneficial for utilities and their customers to own large-scale electricity generation. With competitively procured lower-cost generation balanced with flexible customer-owned distributed energy resources, the utility of the future can deliver more affordable electric service. Several utility functions, such as transmission and distribution, are natural monopolies because competition might result in inadequate or overpriced services. Traditional regulators still treat utility-scale generation as a natural monopoly, while long-term plans only consider utility-owned generation. DER aggregated into utility-scale virtual power plants are more cost-effectively generated if independent power providers bid competitively.