The outlook for renewable energy growth and smart grid integration for U.S. utilities this year is strong, expensive, and unpredictable, with a chance of regulatory and business confusion.
Black & Veatch released its 2013 Strategic Directions in the U.S. Electric Industry report on Wednesday, summarizing the latest views of some 600 utility and energy industry executives surveyed by the utility engineering and consulting firm on subjects ranging from the price of natural gas to the interplay of smart grid and energystorage in managing solar and wind power.
Wednesday’s report showed some continuations from past years' surveys, such as the continued expectation that energy prices will rise in the long term, ongoing concern over aging infrastructure and changing regulations, and the ascendance of ever-cheaper natural gas as an “environmentally friendly” technology. At the same time, the 2013 outlook revealed some new trends as well. Take a look:
First Things First: Reliability Remains Key
As this chart indicates, U.S. electric utilities still regard reliability as their core investment focus, with new generation, transmission and distribution commanding the top investment share of 42 percent of respondents. Meeting environmental concerns was the top budget item for 22 percent, while only 14 percent said they’re looking at energy efficiency, smart grid and renewables as key investment areas, a figure that’s down from 17 percent in 2012.
Renewable Mandates Being Met -- At a Cost
One of the new things in Black & Veatch’s 2013 survey was a question that asked executives at what cost they’re meeting their state-by-state renewable portfolio standards. The answers indicated that 37 percent of utilities that are meeting their RPS goals are doing so via rate increases of greater than 5 percent for their customers -- indicating the hidden cost of mandate-driven integration of higher cost wind and solar power into the grid. Still, a decent number of respondents said they’re meeting their RPS targets with a 1 percent to 5 percent rate increase, while a privileged few are getting there with less than 1 percent.
Of course, we’ve also got a fair share of utilities that can’t justify growing their renewables as a share of generation on economic grounds. Overall, respondents were more optimistic about meeting their RPS goals than in previous years, Ryan Pletka, director of the company’s Western U.S. renewable energy practice, said in a Tuesday interview.
The Smart Grid Adoption Curve
This chart indicates the growth in utilities that have moved past early-stage smart grid investment into physical infrastructure, IT infrastructure and data analysis, for both public and investor-owned utilities. Over the past few years, Black & Veatch’s utility clients have shifted from supporting the proper roll-out and activation of their smart grid systems to “beginning to think about how they are going to get the most out of it, to address some of the problems they’re facing,” he said.
Smart Grid Integration Challenges Await
This chart indicates the top concerns amongst U.S. utilities about how they’re going to get their smart grid systems to work together. Unlike past years, when smart meters dominated U.S. smart grid investment, we’re seeing a new phase, in which utilities and AMI partners strive to make their remote-control meters do more than just act as digital cash registers. The same integration challenge awaits distribution automation, demand response, energy storage and other grid-side deployments, as well as the software systems (MDM, DMS, EMS, CIS, GIS, etc.) on the back end.
Distributed Generation on the Rise
U.S. utilities are concerned about managing distributed generation assets on the grid, including solar panels and other intermittent renewable power systems, he said. “Three years ago, the two technologies were kind of on their own separate paths,” but today, renewables are the target of a number of mitigation schemes and technologies, from energy storage to demand response. And while the roughly 5 percent of the U.S. power supply that comes from distributed generation today is mostly provided by cogeneration systems, waste-to-energy projects and the like, the share to come from solar PV is set to rise dramatically. (Also, Black & Veatch defines “distributed” as anything under 20 megawatts, which can include campus-wide solar systems or virtual power plants/microgrids.)
Energy Storage Top, Smart Grid Bottom, for Renewable Integration?
Black & Veatch’s 2013 report asked respondents to name their top technologies and processes to integrate renewable energy into the grid -- and as with previous surveys, energy storage came out on top, with 54 percent of the vote. Improved grid system operation policies, improved forecasting, demand response and tapping both existing and newly designed conventional power resources like coal, gas, hydro and nuclear all came in at greater than 35 percent.
But smart grid as a category only won 22.6 percent of the tally, getting less interest from respondents than even “curtailment in times of excess generation,” that is, letting extra wind power go to waste, which got 28.7 percent. Of course, today’s smart meters, distribution grid automation and protection systems and other real-world deployments aren’t really built with renewable integration in mind, though that’s starting to change, Pletka said. At the same time, respondents’ enthusiasm for energy storage isn’t yet matched by a corresponding increase in investment into storage technologies for the grid, he noted.