Six trends that will Shape Electric Utilities in 2016

Six trends that will Shape Electric Utilities in 2016

EITHER THE EPA or the groups opposing its Clean Power Plan will enjoy a victory early in 2016, but the CPP's ultimate fate likely won't be decided for two more years. The year also will see natural gas and coal continue their ascension and decline, respectively, in the pantheon of U.S. generation fuels.

Beyond that, 2016 looks to be the year that energy storage starts getting deployed widely; microgrids and community solar continue moving forward, albeit slowly and due mostly to government support; and electric vehicles remain stuck in neutral despite California's embrace of them.
Here's a closer look at the six areas expected to play a big role in shaping and reshaping the electric power utility business in 2016.
1. The CPP
Twenty-six states and numerous industry groups filed lawsuits against the CPP within days of the EPA publishing it in the Federal Register this past fall. Their lawsuits were consolidated into one case by the U.S. Court of Appeals for the District of Columbia Circuit.
In addition to suing to have the plan thrown out, some plaintiffs have filed motions to stay the EPA from implementing it while their lawsuits proceed. To grant those motions, the three-judge panel hearing the case must conclude that letting the EPA begin to implement the CPP would do the plaintiffs irreparable harm and that the plaintiffs have a good chance of prevailing in their lawsuits.
Response dates set by the court mean a decision on the stay motions could arrive early in 2016, although the court is not expected to rule on the full case until late next year or 2017. Assuming the losers appeal, the final ruling on the case might not come from the U.S. Supreme Court until 2018.
In Congress, U.S. Rep. Tom Marino, R-Pennsylvania, has sponsored a bill to reorganize the Clean Air Act in a way that an EPA counsel says would invalidate the CPP.
Additionally, nearly half the Senate supports a resolution to nullify the CPP. Both the bill and resolution would likely require a Republican winning the 2016 presidential election to take effect.
The states fighting the CPP typically have Republican governors or attorneys general, or a prominent mining industry. Business groups fighting the plan include the U.S. Chamber of Commerce, the National Association of Manufacturers, the National Mining Association, the American Fuel and Petrochemical Manufacturers and the American Council for Clean Coal Electricity.
Most electric-power generators have either said they are studying the plan while moving to comply with it, or are actively supporting it.
Atlanta-based Southern Co., which ranked third among U.S. power generators in the amount of power produced by coal in 2013, is seeking a stay of the plan. The National Rural Electric Cooperative Association also asked for a review of the plan, saying the CPP would force its members to close power plants that are producing affordable energy for their customers.
2. Natural Gas
Regardless of what happens to the CPP, natural gas seems likely to continue its inexorable march toward passing coal as the fuel of choice for power plants in 2016.
Natural gas-fired power plants produced more electricity than coal ones for the first time in U.S. history in April 2015, according to the Energy Information Administration.The second time came three months later and the third time came a month after that. Natural gas plants produced 138.2 million MWh of power in August, surpassing the 135.4 million MWh generated by coal plants, according to EIA stats.
Low natural gas prices, aging coal plants, and power-plant emission regulations, including the CPP, are all making natural gas a more attractive generation fuel than coal. As a result, projections in the CPP have natural gas producing a third of the power in the U.S. by 2030, as opposed to coal's 27 to 28%.
3. Storage
Despite its growing profile, natural gas can't afford to get too smug. As Jim Robo, CEO of Juno Beach, Florida-based NextEra Energy Inc., noted in September, he expects energy storage prices to fall at such a rate that after 2020 new storage will supplant new natural gas plants as a way to meet peak demand.
That's only one of many uses foreseen for energy storage, whose proponents say it also will allow consumers not just to store electricity from rooftop solar generation units, but to reduce the amount of power they purchase during their peak demand times and keep their lights on during blackouts.
Evidence to support these notions abounds. A September 2015 report from Moody's Investors Service said a continuing decline in the prices of lithium-ion batteries, which have dropped by more than half since 2010, could make using the batteries for commercial and industrial energy storage economically feasible in the next three to five years.
Storage companies are, in the meantime, drawing investment dollars and are setting up or expanding operations.
For example, Alevo Group S.A. plans to start deploying the GridBanks that it's assembling at a former cigarette factory in Concord, North Carolina. The trailer-sized containers contain batteries that the Swiss company says use an inorganic compound and thus are nonflammable and represent a leap forward in storage technology. Alevo says the GridBanks, in conjunction with its analytics, can be deployed on the grid to provide a wide range of services, including frequency regulation, renewables integration, transmission-and-distribution deferral, peak shaving and voltage support.
In Hawaii, Kauai Island Utility Cooperative hopes to have the first utility-scale solar array and battery storage system operable by the end of the year. The project, which is being developed by San Mateo, California-based Solar- City Corp., has a 52 MWh battery system that can feed up to 13-MW of power onto the grid that serves the island of Kauai at peak demand times, which are 5-10 p.m.
Elsewhere, Palo Alto, California-based Tesla Motors Inc. will be doing pilot deployments of its Powerwalls, which store electricity from solar panels or the grid when power prices are low and use it to provide power at night, or for backup purposes, to the residences they are placed in.
4. Microgrids
Microgrid development in 2016 is expected to pick up, fueled mostly by funding from government sources.
Connecticut and New York launched microgrid programs to help boost the reliability of their power grids after Superstorm Sandy in 2012. In Connecticut, the Department of Energy and Environmental Protection plans to request proposals for $30 million in funding for microgrid projects.
In New York, 2016 will see the continuation of NY Prize, a three-stage, $40 million contest run by the New York State Energy Research and Development Authority to support community grid planning and development. NYSERDA was expecting the 83 feasibility studies that it provided with up to $100,000 apiece in the first stage of the contest to be completed by the end of February. The agency also was expecting to set an April deadline for accepting detailed design proposals for microgrids, 10 of which it was planning to fund with up to $1 million apiece.
Nationally, the Department of Energy has said that field demonstrations of seven microgrid system designs with advanced controllers that it funded in 2014 could start in 2016.
Meanwhile, private-sector funding for microgrid projects could come from Energizing Infrastructure LLC, a joint venture between Topanga, California-based Energizing Co. and New York-based private-equity firm Stonepeak Infrastructure Partners. The joint venture will provide financing for power-grid modernization projects and Stonepeak has committed to contribute up to $250 million to it.
5. Community Solar
Community solar could grow dramatically in 2016 if the electric-power industry were to embrace it.
The federal government got behind it in a big way in July 2015 when the Department of Energy launched the National Community Solar Partnership, which promotes solar arrays with shared ownership.
The government is interested in promoting shared solar because of the growth opportunity it represents for solar power. A report by the DOE and National Renewable Energy Laboratory found that nearly half of all consumers and businesses can't host rooftop solar generation and that making shared solar available to them could boost the amount of deployed solar by 2020 by 5.5 to 11 gigawatts and increase the amount invested in solar deployment by 2020 by $8.2 billion to $16.3 billion.
Despite that, only 24 states had at least one shared solar project online at the end of 2014, according to the Solar Energy Industries Association, which also said that four states -- California, Colorado, Massachusetts and Minnesota -- were expected to account for more than half of all community solar installations over the next two years.
In Minnesota, Minneapolis-based Xcel Energy Inc. opened the first community solar garden under its Solar*Rewards Community program in September. The Solar*Rewards Community program was authorized by the Minnesota legislature for Xcel customers that can't or don't want to install solar panels on their residence or business but still desire access to solar energy.
Minnesota also is the site of a community solar program being offered by Sunrise Energy Ventures, a Minnetonka, Minnesota-based solar developer, and SolarCity.Under the program, the companies would develop up to 100 1-MW community solar installations that Solar- City would invite renters, low-income housing residents, schools, and others in the Minneapolis-St. Paul area to purchase power from.
6. EVs
Barring some unforeseen development, the electric vehicle revolution won't arrive in 2016, largely because EVs so far have proven themselves to be expensive, impractical or both.
Still, both consumers and an electric utility trade group are rooting for it to get here.
The crème de la crème of EVs, Tesla's Model S, has a range of 208 to 270 miles and a network of charging stations that the company said allows owners to traverse the country for free. On the other hand, the minimum purchase price for a new one is $69,900. And, although Consumer Reports found the Model S to be the best-performing car it had ever tested, the publication said that the 1,400 Model S owners who responded to its reliability survey "chronicled an array of detailed and complicated maladies," giving them something in common with George Costanza's psychiatrist.
EVs below the Model S in price are also well below it in range, meaning that the likely buyers for them are homeowners who only take them for short trips and have garages or car ports in which the cars can be left for the four-and-a-half to six hours they take to recharge. So although they're cheaper than the Model S, they aren't mass-market vehicles either.
Still, the EV can't be considered roadkill just yet, not by a mile.
Technological advances that make possible cheap batteries that give the cars long ranges could be coming shortly, according to a peer-reviewed study by Björn Nykvist and Måns Nilsson that was published in Nature Climate Change last March.
Additionally, a survey released in October by the Consumer Federation of America found that 54% of Americans have a positive view of EVs and only 13% have a negative view. Thirty-one percent of respondents said they'd consider buying an EV for their next car, even though only 1% of all cars sold now are EVs.
Meanwhile, a June 2014 report by the Edison Electric Institute urged the electric utility industry to promote EVs, starting with using them in their fleets. "Electrifying the transportation sector is a proactive, positive strategy: it enables significant economic and environmental benefits and new opportunities for consumer engagement," the report said.
California is banking on EVs to help it reach its goal of cutting greenhouse-gas emissions 40% from 1990 levels by 2030. As a result, about half the 330,000 EVs in the country are in the Golden State, meaning that electric utilities there are going to be in the forefront of dealing with whatever issues the widespread adoption of EVs could create.
One bump in the road: A plan by PG&E Corp. to have its ratepayers fund construction of a $654 million network of EV charging stations was rejected by state regulators in September. The San Francisco-based utility said the network would be critical to Gov. Jerry Brown's plan to have 1 million EVs on California roads by 2020.

(This news story is from EnergyBiz)
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