Until now, third parties have usually stepped in to alleviate the expense and maintenance issues by leasing the equipment to the owner or even renting the space for their own equipment and repaying through rent or providing some discounted electricity. The companies sell the rest of the electricity back to the grid.
Third parties are also dominant in the supply of demand response, or electricity provided to the grid by contracted parties using less of it at certain times, usually peak periods. The supply source has great potential. A study released this summer by federal energy regulators shows demand response could free up and "provide" 188 gigawatts -- 20 percent -- of the nation's power supply at peak times. And the supply source has made remarkable progress in markets on the East Coast, including ISO New England and PJM Interconnection.
A third party provides the necessary energy management system and a payment to the volunteers -- usually large buildings or commercial users -- for lowering their demand, while it aggregates the energy savings and sells that "supply" on the market against traditional supply from traditional coal, gas and other generation.
In the past, utilities have outsourced demand-response programs to third-party companies like EnerNOC Inc. and Comverge Inc., but recently, utilities have been bringing those services back in-house.
"Utilities ultimately should be able to play in these end-use added-value functions," Graves said. "I do think they have better economic opportunities than other parties. If third parties are asked to do it, my impression is that they turn back to the utilities and say, 'We need to know a bunch of stuff in order to get it done,'" he said.
Ultimately, third parties also cannot provide the reliability of utilities, said Gabriel of RW Beck. Unlike many consumer choice products -- cell phones or cars, for example -- whose loss can be merely annoying, the loss of electricity can be devastating.
"We want to be off the grid, unhook from the grid, but what if there is an emergency?" Gabriel said.
KEMA's Grant said utilities should be compensated for the high level of reliability they supply. "Technology developments will put in a certain level of self sufficiency, but there is going to be a capacity charge convenience just in case that mechanical device fails," Grant said.
"At the end of the day, I can go back to the grid if I need power. For that privilege, we should pay a charge."
Recession buys time
The recession has provided utilities with an opportunity to consider their next moves as capacity margins have eased and construction costs have gone down.
But, Graves cautioned, "That bigger problem hasn't gone away. It just has been pushed out a couple of years."
The financial squeeze and rapid technology changes are also pushing utilities to partner with other companies, EEI's Owens said.
Companies that lack renewable energy expertise are looking to work with those that have it. Utilities are working with other utilities, third parties or financial industry partners to pay for new power plants or other infrastructure. And utilities are also turning to long-term contracts with independent renewable energy companies rather than owning and financing the new power sources themselves.
Said Owens, "You are not going to have the traditional, vanilla utility."
Reprinted from Greenwire with permission from Environment & Energy Publishing, LLC. www.eenews.net, 202-628-6500
See what we're tweeting about
6 Comments
Add Comment
Reply | Report Abuse | Link to thisThere are plenty of ways for utilities to do the future. Those who won't change will die, sold to someone who can.
Facts are much home RE will soon be cheaper than utility power as one will pay under $10k for a lifetime of energy costs and will come standard on many new homes.
The tech is easy and already here. Ev's will be a big part of it by charging at night on cheap power and supplying it to the grid in the day, peak loads.
Generation will be far more eff. Instead of the 35% eff today in many plants, it will go to 55-70% eff cutting ever increasing fuel costs.
This transformation has been going on for some time. It's not as dramatic as the article suggests. More like incremental change. They will still be operating large centralized plants and selling kwh well into the future. Things wont' change that much. Economics will dictate.
Reply | Report Abuse | Link to thisJerryd
Reply | Report Abuse | Link to thisI'd like to know where you get the efficiency values of 55 - 70% for home generation. Wind power's maximum efficiency is the Betz coefficient (most energy that can be extracted from wind), and is 59.3%. Solar cells have a "maximum" efficiency of 20%.
The centralized plant efficiencies of 35% that you state pertain only to coal fired plants. Combined cycle gas turbine plants can have efficiencies in the 60% range; hydroelectric plants have efficiencies in the 85 to 90% range.
So, once again, what sources can you reference that state residential efficiencies will be in the 55 - 70% range.
GRAVITY, not CO2, causes Global Warming and Cooling.
Reply | Report Abuse | Link to thisThe air has EXCESS CO2. When the sun/solar insolation goes down at night then the amount of the GreenHouse Effect (CO2's delay by catch AND release, not trapping, of photons transported to space,) goes down, thus leaving EXCESS CO2 in the air. When the sun comes up, then more energy transport happens, the GreenHouse Effect (GHE) increases, more CO2 gets used., the temperature goes up. BUT it is the amount of outgoing energy that dictates how much of a GHE there is. The amount of CO2 is irrelevant as long as there is excess. Given that ALL the available (CO2 specific wavelength) energy is already transported by the CO2, then there is NO more available for the so called feedback processes in the global warming models. The excess CO2 must be there to transport energy when it is very hot ,such as summer, or the 49C/120F temperatures during the 2009 Australian bushfires (@385ppm CO2), or the world record 58C (Libya in 1922 -@280 ppm CO2).. So if hypothetically all the CO2 is used up at 58C then there is at least 40% excess today at the world average temperature of 16C/67F according to the Stefan-Boltzmann Law of Physics. Contrary to the IPCC CO2 models, adding more excess CO2 to the air can't cause warming unless you add extra energy. Limiting CO2 emissions by Cap & Trade just removes excess CO2. It will NOT change the temperature.
The real cause of global warming and cooling is the variable gravity/energy from planetary eccentricity as shown in "John Dodds Wobble Theory of Global Warming" (free summary, & full copy available at www.scribd.com).. The forces of gravity cause Earth rotation and winds and tides (moon or lunar gravity) and ocean and liquid core currents and friction and heat. The energy from Gravity is NOT addressed in the GCMs. Gravity also causes the magnetic field by the rotation of liquid core ions through a gravity field. Wind & tide power IS gravity power- where else does the energy come from? The variations in gravity are shown to correlate to the measured ice core temperatures for thousands of years, and to the 60 year cooling/warming cycles from 1880 to 1940 to 1998/9 and to the future 2028 temperature bottom and the 2058 temperature peak. Gravity explains warming AND cooling and is predictable. There will be a gravity spike on Earth in Oct 2010, due to the proximity of Venus and Jupiter. Adding the variable forces and energy of gravity to the Milankovitch Eccentricity (Timing) Theory allows it to overcome it's major deficiency of insufficient solar energy variation to explain ice ages. Gravity explains why the temperature can go up from 1970 through 1998, when the sole source of energy in IPCC models, solar insolation, was essentially constant. Gravity, which is much stronger than sunlight, supplies variable energy to drive warming and cooling. CO2 doesn't.
John Dodds
thanks for that 911 on the gravity involvement...I thought the article would broach the Cap & Trade issue, which seems to me to be a Hook & Crook way to allow utilities to raise their rates with that convenient excuse for a tax, which i'm sure if inacted, the market would provide some means to lever themselves against their own position by some sort of 'CO2 Credit' derivatives, which the big players would use to squash the little utilities and take them over. What a LOAD!
Reply | Report Abuse | Link to thisAnd if CO2 was the culprate, they've already gone past the tipping point...so why create additional fiscal hardship on the common folk with a new tax??
Hard to imagine this whole Cap & Trade wasn't cooked up with the help of the Fat Cats of Wallstreet.
I kept womdering when I was going to learn something new on SciAm. Thanks Dodds.
Reply | Report Abuse | Link to this