Over the past four months, Hawaii has established performance-based ratemaking, initiated a microgrid tariff proceeding, unveiled a grid planning proposal, and enacted three bills on climate including a framework for carbon credits to fund carbon mitigation projects. The island is also exploring an electric vehicle roadmap.
The convergence of technologies, markets, rate design changes, and business models is unleashing new opportunities in the emerging electricity storage sector. Energy storage can provide multiple services at the same time or with the same resource, providing operational flexibility as the system becomes decentralized and decarbonized. While storage provides undeniable benefits in grid-connected solutions and flexibility, market mechanisms and rate designs will play a critical role in scaling up deployment. State policies that pair distributed generation with storage provide further avenues for growth.
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Growing large-scale deployments of energy storage systems, driven by declining costs and evolving technology, has opened an opportunity for these systems to compete with traditional natural gas peaker plants. Standalone storage makes for a resource-agnostic solution that would enable utilities to charge up as required using the available energy mix. As improvements in technology allow battery systems to provide power for longer periods, utilities will benefit as they must manage a growing share of renewables while meeting peak demand.
Net metering reforms are becoming more common to keep pace with the evolution of solar and other forms of distributed generation. Regulators are increasingly pushing for adjustments to the valuation of distributed generation as higher levels of supplies begin to strain the grid. Rate designs that value solar-plus-storage could solve the growing concerns of cost shifts and approaching net metering caps.
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Electric utilities are striving to develop Integrated Resource Plans based on an evaluation of the full range of available supply and demand side options in a changing energy landscape that is becoming more complex and uncertain due to emerging trends. These include intermittent large-scale renewable energy, customer-sited distributed energy resources, energy efficiency, demand response, upgrades to aging infrastructure, and legislative clean energy mandates.
The dramatic fall in renewables costs have enticed several utilities to look at large-scale investments and also attracted a large number of independent developers seeking to qualify their projects for must-buy obligations under the Public Utility Regulatory Policies Act of 1978 (PURPA). Utilities have complained about having to overpay qualifying facilities and buy electricity even when they don’t need it. The must-buy requirements are also interfering with the utilities’ own plans of developing renewable plants, intensifying the pushback against PURPA.
Extreme weather is figuring more prominently than ever into America's energy policy as the nation recovers from a rash of storms and a catastrophic hurricane season that's inflicted hundreds of billions of dollars in damage. In the name of resiliency and reliability, the Trump administration and regulators alike are seeking unprecedented changes to wholesale power markets, as well as urging massive investments in nascent technologies, like microgrids and battery storage, to gear up for the next bomb cyclone, derecho, polar vortex or hurricane season.
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PJM Interconnection LLC’s annual capacity auction saw clearing prices ramp up 83 percent from a year ago to $140/megawatt-day, rebounding after a sustained fall for two consecutive auctions. Renewables and demand response did surprisingly well especially because they are deemed seasonal assets with limited ability to meet the new stringent performance standards that require year-round capacity. Despite the high prices, the amount of nuclear generation that cleared the auction fell by over a quarter from last year.
After years of retail choice, some states have begun to examine whether customers are better off with competitive retailers or on the default service tariff. As retail choice comes under greater scrutiny, regulators will focus on stringent market entry rules and market monitoring that can help avoid deceptive tactics.
With four nuclear reactors potentially not clearing the PJM Interconnection’s annual Base Residual Auction for the 2021/2022 delivery year, the clearing price may see a rebound after a sustained fall for two consecutive auctions.
Nine out of the ten resource zones cleared at $10/MW-day in the Midcontinent Independent System Operator’s sixth annual Planning Resource Auction, up from last year's clearing price of 1.50/MW-day. MISO said that increased demand and lower supply were largely responsible for the higher prices and expects adequate capacity for the planning year starting June 1.
Demand response (DR) is gaining relevance as a vital grid balancing tool amid the rapid surge in intermittent generation resources. The next generation DR will provide more localized responses to areas of stress to influence energy usage patterns. The digitally enabled grid, advanced metering infrastructure, and automated strategies coupled with dynamic pricing will support the DR market.
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