In 'Post-Renewable' California, Energy Delivery & Pricing Changing Rapidly

CPUC Chair Michael Picker

The growing set of renewable energy technologies, programs and financing schemes that customers are seeing today include claims that you can go “off the grid” for $30 per month. At VX2017, energy leaders from the regulatory, utility, and business community came together to confirm the realities, the true costs, and the societal impacts of distributed generation, home storage, and an “interactive grid”. VX News presents an excerpt of this panel, featuring former Southern California Edison Vice President Jim Kelly, California Public Utilities Commission Chair Michael Picker, California Energy Commission Chair Robert Weisenmiller, Advanced Microgrid Solutions CEO Susan Kennedy, Berkshire Hathaway Energy Vice President Jonathan Weisgall, and Southern California Edison President Ron Nichols. 

Jim Kelly: Popular media is filled with stories about how people are, can, or should be going “off the grid.” It addresses how cheap rooftop PV solar has become; how home energy storage is now ready for primetime; how energy efficiency is so advanced that we shouldn’t need electricity anyhow; and, often, how utilities can’t be trusted.

This panel will talk about the reality and the promise of a growing set of technology programs and financing schemes, as well as the claim that anyone can go off the grid for $30/month.

Can the average ratepayer really go off the grid entirely and still enjoy air conditioning, lighting, TV, and internet? What kind of a home system is required for that? What does it cost? Is it hard to operate? Is it just solar over batteries, or does it involve other technologies, like fuel cells? Can it last for several days of gray skies, or is grid backup still required? If grid backup is required, who should pay for it?

The questions go on. And one that I always add is: What about economically disadvantaged portions of society that can’t afford to buy the cool stuff, and don’t have the credit-worthiness to finance it? Are they going to be left out of this revolution, or is there going to be room for them too?

Susan Kennedy: Of course you can get off the grid for less than $30/month. At my house in Calistoga, I have a propane tank. I have an old-fashioned fireplace that burns real wood. I have a big hand-pulled generator fired by gasoline, which I use whenever the PG&E lines go down.You could go off-grid for $30/month fairly easily; in fact, probably even cheaper. The question is: Can you do it cleanly? That’s an entirely different question.

My major clients in the commercial and industrial space are trying to become, not grid-independent, but grid-interdependent. They’re putting in fuel cells, solar, batteries, biomethane, and more, because they want to be able to island when there’s a disruption. Does that mean they’re off-grid?

Michael Picker: When it comes to the electricity grid, California has become post-renewable.

Renewable energy is so cheap that it’s a commodity. The utilities are procuring ahead of the requirement to hit 33 percent of our electricity supply by 2020, simply because they’re getting good contracts. One feature of this post-renewable era is that the value added isn’t simply getting renewable electricity; it’s also the technologies that we use to get it.

The CPUC recently dedicated a 40MW battery-storage facility at the terminus of the Tehachapi Renewable Power Transmission Line, which brings in more than 2GW of wind and solar from the California desert. Batteries at that substation not only add a little bit of storage and extend the day of variable renewable resources; they also add load following and helps to deal with voltage support. We’re starting to see additional needs being met by these new technologies.

We’re also starting to see people aggregating customers in new ways through the use of smart meters. A good example is a company in San Francisco that essentially guarantees you the normal PG&E rate, but if during certain hours you curtail your electricity, they send you a check. It’s very popular; people are signing up like crazy for that.

These are all things that we would never have expected five years ago. Five years ago, I was still going to conferences where people were telling us that we wouldn’t get to 33 percent by 2020. Now we’re installing, at times, three battery facilities in one day to help us meet the needs of the grid in Southern California without the Aliso Canyon gas storage facility. This is a phenomenon where we’re starting to see renewables compete against renewables—not just against fossil fuels.

The second feature of this post-renewable era is a tendency to use clean electricity first as our fuel. The Brattle Group released a report saying that, by 2050, they expect the use of electricity in the United States to double, but greenhouse gas emissions to drop by 72 percent. They say that will happen not just by cleaning up the electricity supply through renewables, but also through fuel-switching for gas used in residences, industry, and transportation. 

In California, 20 percent of our GHG emissions come from our electricity supply. We’ve done a lot to clean that up. 30 percent comes from the use of gas, and 40 percent comes from transportation. If we’re going to hit our 2030 and 2050 goals, we have to follow this pathway that the Brattle Group laid out for us. Some people want to focus on increasing the percentage of renewables in our electricity supply. I say that this approach is too focused on the numerator; we need to focus on the denominator. It’s better overall to reduce all the emissions from electricity, gas, and transportation by 72 percent than to make 100 percent of our electricity renewable.

The third feature of the post-renewable era is that customers are increasingly becoming active participants. Perhaps by the end of this year, if everything stays on course, 40 percent of the electricity supplied to consumers in California will come from, not investor-owned utilities, but third parties. (This is excluding the areas where publicly owned utilities are active, because they still tend to be vertically integrated.)

Investor-owned utilities have not owned generation since 1995, except for some legacy projects. They contract with companies like Berkshire Hathaway and other independent power producers. If, in fact, community choice aggregators, direct access services, rooftop solar, and other new technologies can supply people’s needs, perhaps the utilities should focus on the thing they’re really good at: building the infrastructure that we need to drive greenhouse gas out of California’s economy.

The question of getting off the grid cheaply is not relevant. What we’re really talking about is changing the electric system from a commodity-delivery system into a value-delivery system, and the utilities into platforms for helping people obtain those services.

Ron Nichols: Let me put the concepts of distributed energy resources and going off-grid into context.

As a utility—and principally, today, a distribution utility—we have three basic groups of customers. One is the early adopters, who desire and embrace new technologies. They’re savvy, and they understand how these things generally work. They want control over their supply. They’re doing everything they can to reduce their energy requirements, and they want the supply they use to be renewable. This is not a big group.

Another group has interest in these types of things, but doesn’t have detailed understanding or knowledge of it. That’s a pretty good size number of our customers; interest in these things is growing. Then there are those who don’t care about controlling their supply, don’t want to or can’t afford to invest in something like that, and are not interested in entering into a contract with a third party to do it.

The mix of those groups is going to change over time, as technologies get lower cost and better performing. As a utility, we need to serve all of these groups. We need to meet all their needs at the same time. I think seeing going off-grid as the nirvana of distributed energy resources does a disservice to what we’re trying to do with our shared energy resources—as a company that’s working to get more customer solar out there, make batteries work on both sides of the meter, double down on energy efficiency, and get more electric vehicles out there to help deal with GHG emissions and criteria pollutants.

The way this effort is going to work is by having the opportunity to get the value to the customers who are deploying those resources. Going off-grid deprives not only that customer, but also the rest of the customers who don’t have distributed energy resources, the benefit of being able to use surplus solar power during the day. They need to get the right price signals to have the opportunity to do that. If our goal is to increase distributed energy resources as a strategy to grow our reliance on renewable energy and reduce greenhouse gas emissions, then having a connected grid is going to give us the biggest bang for our buck. We should be trying to make this collection of resources work—on a grid-connected basis.

If we keep our eye on the ball and keep going in the direction we’re headed now, California could deploy these resources in a way that works to provide services at the wholesale level—like they do with the California ISO program—and at the same time provide a contribution to distribution system reliability.

Jonathan Weisgall: I asked our engineers at Berkshire Hathaway Energy: What do you need to get off the grid? What does it cost? It depends on demand and supply.

The average US home uses about 30 kilowatt hours (kW/h) a day. If you had a steady supply of 30kW/h, you’d be in good shape. But that’s not necessarily the case. Obviously, there’s a lot less solar generation—i.e. supply—during the winter. But demand is higher in the winter for heating, as well as in the summer for air conditioning. There’s an imbalance throughout the year, so you need a battery system that can provide storage. The question is: How much storage do you need? We calculated this for Iowa in terms of Tesla Powerwalls.

We took about 25 years of hourly data from the airport in Iowa and compared it to the supply on an annual basis—how much solar is available, assuming a rooftop system. Then we back-solved how much storage you would need so as not to let your supply dip below the 30kW needed for one day. In Iowa, at least, you would need about 55 days of storage—or about 1650 kW/h—to get through your worst day, say in late February.

The Powerwall that’s currently on the market is 6.4KW. Assuming an 8kW/h solar system, with a cost of about $25,000 to put it in, you would need upward of 258 Powerwalls. The cost is crazy. You’re looking at over a million dollars. The Powerwall coming out next year would be much more efficient, but you’re still talking a lot of money.

We did more analyses: In Oregon, costs are even higher because it’s cloudier. In Nevada and California, costs are lower. But it’s still a lot more than $30/month. So the answer to the panel’s question is: No, you can’t do it.

Robert Weisenmiller: The CEC has done analyses similar to Jonathan’s. Our analyses reinforce the notion that you’re going to have to store power—either in the grid through net-metering, or in batteries. And if you’re going to store it off the grid, you’re going to need a lot of batteries to pull it off. One thing we all have to focus on is making sure all Californians benefit from our preferred technology programs. It’s easy to focus on the early adopters, who have lots of money and great FICO scores. The reality is that a lot of our people don’t have great FICO scores, and a lot of people live in rental housing.

I recently talked to a utility representative about GRID Alternatives, a non-profit that does a great job putting solar on low-income housing. He told me, “The first step is actually putting a good roof on that housing­­ before we can put solar on the roof.” We need to use a lot of creativity to reach out to disadvantaged communities—not just to the early adopters who are trying to figure out how many Tesla Powerwalls they need to buy to get off the grid. We have to make sure all Californians can benefit.

"What we’re really talking about is changing the electric system from a commodity-delivery system into a value-delivery system, and the utilities into platforms for helping people obtain those services" –Michael Picker
"If our goal is to increase distributed energy resources as a strategy to grow our reliance on renewable energy and reduce greenhouse gas emissions, then having a connected grid is going to give us the biggest bang for our buck". –Ron Nichols