This week’s grid edge developments have been overshadowed by all the activity going on in the solar sector, from insolvency for SolarWorld and tenKsolar, to earnings reports from SunPower and the flurry of news and reviews of Tesla’s solar roof rollout. But there is still plenty of grid news to cover, starting with the little-noticed calling up of demand response resources in the Midwest territory of grid operator MISO for a once-in-a-decade emergency.
More emergency DR, this time in the Midwest
Last week we covered the news that California grid operator CAISO had called upon its emergency demand response for the first time in a decade. Well, it turns out that on April 4, MISO also deployed emergency DR for the first time since 2007. Here’s a link to the presentation on the event, which was discussed in detail at the Market Subcommittee meeting on Thursday.
MISO has long been considering changes to its demand response framework, which relies heavily on these almost-never-called-up resources. But we’re starting to see innovation be taken up by the grid operator, and startups like Voltus are taking advantage of opportunities in the region.
SGIP update: The pros and cons of adding grid support rules to an energy storage lottery
Also in the news last week was California’s Self‐Generation Incentive Program (SGIP), the country’s premier incentive for behind-the-meter energy storage. As we've covered in recent weeks, this year’s round of openings for the program was heavily oversubscribed, leading to the California Public Utilities Commission setting up a lottery to determine who will get paid and who won’t.
As part of this lottery, companies including Advanced Microgrid Solutions, Green Charge Networks and Stem (which file under the Joint Storage Parties rubric at the CPUC) have proposed an additional “grid support” lottery priority category for energy storage projects that “operate in a manner that provides benefits to the grid, such as limiting charging load to off‐peak or other utility designated times only.” This makes some sense, given that SGIP is looking for ways to differentiate between different applications of storage.
But the Center for Sustainable Energy, a nonprofit group that administers one of the state’s big efficiency programs and comments frequently on energy policy, doesn’t like this idea. In a CPUC filing this week, CSE laid out its concerns with the proposed category, which it said is “even more vague than the priority category for storage charging from renewable generators,” another innovation suggested by the above companies. The main problem, it said, is that “compliance cannot truly be confirmed until the project is operational. This would exponentially exacerbate the complexity of lotteries, potential gaming, and inequities in the application process” -- a nod to the problems that occurred with last year’s auction, when companies including Stem were found to be gaming the application system to get more projects approved.
PG&E’s rate case settlement: A billion-dollar compromise
This week also saw Pacific Gas & Electric reach a settlement with 14 different ratepayer, environmental and industry groups on how much it will collect in rates and spend on its business from 2017 to 2019. Under the terms of the deal, PG&E’s revenue requirement for 2017 -- the total amount of revenue needed to pay all operating and capital costs of doing business -- will increase 1.1 percent over its currently authorized level of $7.92 billion, with a further increase of $444 million, or 5.5 percent, in 2018, and $361 million, or 4.3 percent, in 2019.
This year’s authorized increase will actually see decreases in spending for electric distribution (down $62 million) and gas distribution (down $3 million), while increasing electric generation spending by $153 million. As CPUC President Michael Picker said, it’s all a “compromise that significantly reduces the revenue requirement originally sought by PG&E,” part of the ongoing dance of negotiations that surround rate cases. Last week, we noted that Southern California Edison is seeing similar challenges to its grid modernization budget by distributed energy companies wanting to see the value of the resources they’re putting onto the grid edge reflected in its spending plans.
More evidence that green power and grid integration work well together
As the Trump administration studies the effects of intermittent wind and solar power on grid stability and baseload generation resources like coal and nuclear power, a new study indicates that California can push ahead with its expansion of grid markets across the U.S. West without opening itself up to federal challenges to its green power policies.
The study from Yale’s Environmental Protection Clinic finds that, since CAISO is already regulated by FERC, it doesn’t face additional federal oversight under its plans to add multiple Western utilities to its day-ahead energy trading markets. “We’re hoping this report can help reassure California legislators that, in taking that step, they’re not putting the clean energy policies they really care about at risk,” Juliana Brint, a doctoral candidate at the school and co-author of the report, told the San Francisco Chronicle.
Earnings reports: Silver Spring walks back guidance, EnerNOC picks up some steam
Last week’s earnings roundup included a quarterly earnings uptick for smart meter maker Itron. This week saw rival Silver Spring slip in the market, after it announced in its first-quarter earnings call that it’s pulling back its 2017 guidance. Silver Spring now expects full-year 2017 billings to be "in the range of flat to up approximately 5 percent versus last year, compared to previous guidance of full-year billings in the range of $300 million to $320 million, or 2 percent to 9 percent growth from 2016's $294.6 million in billings.
Shares in the Redwood City, Calif.-based company fell 14 percent after the news broke, but CEO Mike Bell said in a statement that the company is "right-sizing our expense structure to support our goal of profitable growth,” as it seeks more opportunities in the broader “internet of important things markets.” (This rather cumbersome phrase is, by the way, currently the hip way to differentiate a company’s efforts from the overhyped internet-of-things field.) Silver Spring, like Itron and other smart metering rivals, is seeking to expand its reach to streetlights (which Silver Spring has a lot of already), traffic monitors, air quality sensors, and other networked devices.
Meanwhile, demand respond provider EnerNOC, which has been struggling financially and reported in March that it’s considering a sale of its energy efficiency and management software lines of business, reported first-quarter earnings on Tuesday that beat analyst expectations. The Boston-based company reported a loss of 92 cents per share, beating the consensus estimate of $1.36 per share and 2016’s loss of $1.41. Revenue of $48.1 million beat analyst estimates of $44.7 million, but was still nearly 10 percent down from the same quarter last year.
Blame it on the rain? Microinverter maker Enphase slumps, while rival SolarEdge grows
Solar microinverters are a competitive business, and as of today, SolarEdge is competing a lot better than rival Enphase. As we reported this week, Enphase reported first-quarter revenue of $54.8 million, well below analyst expectation of $62.7 million, and a 40 percent drop from the same quarter last year. Enphase sold approximately 138 megawatts of its products, down 6 percent from the same quarter last year and 30 percent from the previous quarter.
Enphase actually blamed this decrease on the wet winter weather, which led to only 21 of the quarter’s 65 scheduled working days being suitable for installations. “Moving forward, we expect to see recovery in Q2 in line with improving weather conditions as operations have already begun settling in and picking up steam.” But as our Eric Wesoff has long noted, the company has been struggling to maintain market share against competitors, while its energy storage and home energy management business lines haven’t grown to expectations.
SolarEdge, its main competitor, reported first-quarter revenues of $115.1 million, right in line with analyst expectations, and non-GAAP earnings per share of 36 cents, beating forecasts of 28 to 32 cents per share. The Israel-based company shipped 455 megawatts of inverters in the quarter, up from 413 megawatts in the previous quarter, and did not complain about the rain.
Enbala gets deeper into demand response in New Mexico
Finally, let’s look at the trend of technology companies getting deeper into managing the businesses their technologies enable. This week’s $100 million purchase of demand response provider Comverge by Itron is one example. So is Enbala’s new project with utility Public Service Company of New Mexico.
The collaboration involves PNM’s Peak Saver load management program, which works with large commercial and industrial customers to reduce the amount of energy they use during the hottest days of the year. Starting in 2018, Enbala will take over the 15 megawatts currently under control, and bring on additional capacity, with responsibilities including “marketing, installing load control equipment, data collection and analyses required for validating the contract capacity.”
Enbala has managed large C&I customers for the programs it operates in PJM and Ontario grid operator IESO. It’s also done some behind-the-scenes work with utility partners like Hawaiian Electric and Southern California Edison. But this is the first time the startup is taking the reins of a utility demand response program directly.
