by Emma Foehringer Merchant
July 10, 2018

When it comes to the cutting edge of energy innovation, it's common to criticize utilities and governments as slow to change.

Utilities must balance reliability and an outdated incentive system with rapid technological change. Governments must work through layers of bureaucracy. But Rocky Mountain Institute’s eLab accelerator, described as a “boot camp for electricity innovation,” is trying to help power companies and governments balance these forces. 

Since 2014, the program has brought big utilities and government stakeholders together with new energy innovators to establish best practices for projects and business models.

According to one program manager, Jason Meyer, the accelerator fashions itself as a "platform to host the most critical conversations with the most critical people in the electricity industry.”

Greentech Media took a look at three of the projects chosen for this year’s program. They tell us a lot about where the sector is headed.

A "paradigm shift" for New Mexico’s largest utility 

Like many modern utilities, the Public Service Company of New Mexico (PNM) is seriously grappling with a world without coal. In its latest integrated resource plan, the state’s largest electricity provider decided to completely excise coal from its portfolio by the end of 2031. 

The move is part of an effort to catch up with states already taking advantage of their renewable resources. Though New Mexico has strong solar and wind potential, those sources made up just 9 percent of PNM's generation in 2017. 

“It’s important that New Mexico not get left behind as we transition,” said Patrick O’Connell, director of energy planning and strategy at PNM. At the same time, though, he said he's coping with the reality that in the past, it's been difficult to get renewables approved.

O’Connell said moving New Mexico's generation portfolio toward a cleaner mix requires a “paradigm shift” on the part of both the utility and customers. 

And so, PNM representatives, along with environmental, tribal and legislative stakeholders, turned to RMI’s accelerator to “chart a course forward” for a generation profile in flux.

As in much of the country, doing away with coal is a controversial idea in New Mexico. O’Connell said that public engagement on the utility’s latest integrated resource plan showed that many people in New Mexico are scared about the energy system — “whether you’re a third-generation coal miner or you’re terrified of climate change” — but for different reasons.

“We’ve got a lot of folks who are upset for good reasons, and we’re trying to navigate that and come to a solution where everyone can benefit," O’Connell said. “In this environment, we’re trying to make a big change and move forward.”

The state has a renewable portfolio standard of 20 percent, which it's already on track to meet. Three power-purchase agreements approved in March to power a Facebook data center added 266 megawatts of wind and solar alone, upping the clean energy in PNM’s portfolio by 50 percent.

But those resources won’t entirely replace the nearly 700 megawatts PNM will lose when it drops its shares of the coal-powered San Juan Generating Station and the Four Corners Power Plant. 

New Mexico law also declares that any regulated utility must avoid waste while ensuring its customers have access to reliable electricity. Right now, O’Connell said the cheapest version of that system involves peaker plants. But he’s heard from people across the state that they want a focus on renewables, not gas. 

“From my work, I knew that wouldn’t result in a reliable system,” he said. “You need those complementary bases to go with your renewable energy.” At the same time, variations in seasons — like a windy and sunny spring — mean that build-out of clean energy will lead to an excess of generation at certain times of year. 

“Doing the math on it, the economic choice there is to curtail,” said O’Connell. “So, to me, I was afraid that looks like waste.” 

The accelerator gave the team time to discuss how to cope with all these forces away from the political and cultural pressure of the state, a key goal of the program at large. 

"Helping people work together differently for new and better outcomes is a key ingredient to the accelerator — building that social capital on teams to have them perhaps have a different working relationship,” said RMI's Meyer. 

Ultimately, the team came to agreement on a broad vision that New Mexico is moving toward more renewables and that if stakeholders work together, they can smoothen and perhaps speed up that transition. They also agreed to return to the groups they represent, from environmentalists to legislators, and foster more cooperative conversations that sidestep controversy.

To sketch out the more granular details of the transition, the accelerator team will continue checking in on formal group calls to facilitate collaborative decision-making. Members are also considering creating an advisory group and working groups to make official its clean energy conversations. They're also pondering outreach efforts during the upcoming gubernatorial election.

What comes next will determine their success. 

“We were formed at the accelerator, so we’re still trying to work forward and grow," said O'Connell. "It still feels like an early stage. […] We didn’t walk out of accelerator thinking we’d have it solved.”

Matthew Jaramillo, who works in government affairs at PNM, said collaborating on the process indicated that New Mexico can reach compromise — as long as planning incorporates public input from the beginning, rather than asking for approval at the end.

“When people have come together and worked together, those policies have passed,” said Jaramillo. 

O’Connell also said the program helped stakeholders understand they are all generally in agreement, a realization they'll bring back home. 

“If you go far enough out, you’ll find among that diverse group, people think where we’re going is very similar; it’ll be a world dominated by clean energy sources,” O’Connell said. “We all see this is where we’re going.” 

Working at the intersection of "advanced energy, resilience and national security"

Mike Wu resigned from his position as a senior adviser on energy resilience to the Air Force on January 20, 2017. 

A couple of months later, he started his own consulting firm, Converge Strategies, that focuses on “the intersection of advanced energy, resilience and national security.” And just a few months after that, Converge received a grant from the Department of Defense to start work on the Military Energy Resilience Catalyst (MERC).

Though the Trump administration’s agenda on energy and the environment has been roundly criticized, Wu said the importance of energy resilience in defense doesn't change “based on politics.” 

Speaking from his Air Force experience, Wu said an increasingly networked military must consider uninterrupted electricity and communication systems as key security concerns. Although the military has already changed the way it undertakes missions based on climate change, Wu sees plenty of room for more communication between the Air Force, the Army and the Navy to confront energy risks. 

MERC joined the accelerator to strengthen those channels and make sure energy remains top of mind.   

“At some point this concept had to go from being my idea to being this group of really committed, brilliant people and to be their idea,” Wu said. “The biggest takeaway is that the military needs to focus on identifying and prioritizing its critical requirements, and then working with partners in industry and particularly in energy technologies to implement new systems.”

The grant MERC received this year from DOD’s Environmental Security Technology Certification Program, which funds technology demonstrations, is also designed to help Wu's idea scale from his prior work with the Air Force to the entire military. 

Tim Tetreault, manager of ESTCP's energy and water program, said the main objective is to find solutions and help transfer them to wider applications. It's geared “to help make sure that we don’t just have a report that sits on a shelf," he explained, but rather "that we can help facilitate the uptake of that technology out in the field.” 

According to Tetreault, the different systems and priorities of the military energy offices — each branch has its own — means it can be difficult to coordinate among them. RMI’s accelerator program brought together participants from each.

“Without the accelerator…there would be, I think, a lot more skepticism,” said Tetreault. “By the end, we had a lot more support from them, and I am a lot more confident that the project we’re funding is going to be successful.”

Wu said the accelerator helped him understand that the program should focus more on the motivated champions of resilience projects, rather than just the projects themselves. He believes that approach will connect the military bases working on innovative projects under a huge bureaucracy and a new administration. 

“I think it’s a pretty clear and exciting success that this is something that the Department of Defense decided to invest in because it’s not what they traditionally invest in,” said Wu. “It’s not a piece of hardware or a weapon system; it’s investing in people.” 

MERC plans to build a searchable technology database that allows its partners to learn from projects at other bases. Wu said he’ll also host workshops to bring together mission owners, energy managers and private-sector players to discuss progress and new technologies. 

Most immediately, Wu will bring some of the interested parties together at the Department of Energy's Energy Exchange conference in August, where he hopes to scale the project to new participants representing more branches of the military. 

“This was our way of catching up”

According to Jason Klotz, emerging technologies manager at Portland General Electric (PGE)*, plentiful hydropower and low retail electricity rates have given the Pacific Northwest little incentive to prioritize demand response as much as other areas of the country are doing.

As a point of comparison, he pointed to programs like those in states that have an independent system operator — Oregon does not — that have been working on DR for years. 

But the state's lagging progress was aggressively challenged in 2016, when the utility’s integrated resource plan revealed a capacity gap starting in 2021.

To bridge it, the Public Utility Commission of Oregon asked PGE to acquire at least 77 megawatts of winter demand response and 69 megawatts of summer DR, with a goal of a cumulative 353 megawatts. A 2016 law also increased Oregon’s renewable portfolio standard to 50 percent by 2040 and encouraged utilities to invest in DR and energy efficiency programs before adding new generation. 

Those DR goals grew more ambitious this year, after PGE identified the need for 900 megawatts of demand-side flexible load in the coming decades (about a quarter of its current demand) as part of a study on how the utility could achieve deep decarbonization.

To meet the daunting targets, the PUC also asked PGE to create a program called the Demand Response Test Bed, a first-of-its-kind project in the U.S. to study how best to engage customers in demand response. Building out that program pushed PGE into the accelerator.

“This was our way of catching up to a certain extent,” said Klotz.

The goal wasn’t to build a traditional DR program, but to create something much more dynamic and “capable of providing resources to the grid and grid operators 24 hours a day, 7 days a week,” according to Klotz.

Ultimately, the mission was to push the test bed's scope past other utility DR programs that have existed for much longer. PGE’s mandate under the accelerator was to experiment with flexible loads in the Northwest “that are difficult or impossible to obtain.”

Oregon hopes to test the current bounds of demand response. 

“As far as we can tell and understand, what we’re attempting in the test bed is a national first, so we may end up leapfrogging the work done in other states and service territories,” said Klotz.

Accelerator participants were tasked with defining what the test bed would mean for utilities — and how to implement it.

Klotz said the accelerator helped flesh out the concept. 

The first phase of the program will focus on three substations in PGE’s service territory: one in Portland, one to the south in Milwaukie and another to the west in Hillsboro. Combined, PGE said they offer a “representative example” of the utility’s customers and load needs.

Those substations will be the first to receive upgrades that allow for high penetration of distributed energy resources and demand response, and they’ll also be the first to get significant investment in charging infrastructure for transportation electrification. 

PGE will work to engage as many customers as possible in the initial programs to gather data on their participation. Klotz said PGE is still working to identify what “scale” will mean for its DR programs, but the utility hopes to enroll at least 25 percent of customers in one type of program.

The 2018 study that increased PGE’s flexible load goal also estimated that a full 50 percent of customer thermostats and 75 percent of water heaters would have to be enrolled in DR programs to meet the 900-megawatt target. Klotz noted the test bed’s stakeholders all agreed they want to “push the bounds of participation” with how fast and at what scale they can incorporate new customers.   

“Here in the Northwest, and in Oregon in particular, we have a very strong mandate from our policymakers and from our customers to drive toward a clean, greener system,” said PGE spokesperson Steven Corson. “That pushes us in this direction.” 

*This piece has been updated to reflect the correct name of PGE.