By Sopitsuda Tongsopit and Hannah Safford (November 26, 2019)
Whether in the Western United States or Eastern Asia, electric utilities around the world are grappling with the realities of an uncertain but exciting energy future. A core component of this future is the rise of distributed energy generation.
These themes were at the heart of a recent week-long study tour organized by the Policy Institute for the Thai Metropolitan Electricity Authority (MEA), a Bangkok-based distribution utility serving more than 4 million customers. From October 28–November 6, delegates from the MEA met with power-sector experts, utilities, and technologists in California and Oregon to discuss how distributed energy resources (DERs) can boost grid reliability and reduce consumers’ bills.
The study tour not only boosted confidence in DERs but also provided a glimpse into a potential future of digitalization, decentralization, and decarbonization of the electricity sector in Southeast Asia.
MEA delegates arrived just as the vulnerabilities—and strengths—of California’s electric system were on full display. High winds and extreme fire danger forced unprecedented public safety power shutoffs (as well as unplanned power outages) across Northern California, illustrating the risks of relying too heavily on a single utility and an aging, interconnected electric grid. But only 50 miles south of the rapidly spreading Kincade fire, MEA delegates were able to witness microgrid resilience in action. While the rest of Sonoma County was in darkness, the Stone Edge Farm MicroGrid remained intact. Progressive design and engineering combined with clean energy generation and storage capacity enabled Stone Edge to continue powering its multi-residential property throughout days-long outages.
There is still much work to be done before microgrids are widespread enough to provide a meaningful bulwark against mounting impacts of climate change. But California is taking important steps to catalyze growth of the DERs that can help improve grid reliability and resilience. The state energy action plan emphasizes the importance of energy efficiency, demand response, renewable distributed generation, and energy storage—all priorities that support a thriving market for DERs. The MEA delegates learned that a California utility had recently made the largest energy storage procurement in history, anywhere in the world. Under Assembly Bill (AB) 2514, the California Public Utilities Commission set energy-storage procurement targets for each of California’s three Investor Owned Utilities (IOUs). These targets called for 1,325 MW of storage to be contracted by the end of 2020 and implemented by 2024. To date, utility storage procurement has outpaced this target. Particularly notable was the July 2018 announcement that PG&E planned to replace three gas-powered plants with the 568 MW of battery storage—the biggest battery projects in the world.
MEA delegates also met with representatives of Stem Inc., a company that combines energy storage with artificial intelligence to help utilities and other projects manage and meet energy demand. Stem explained how one of their clients, Southern California Edison (SCE), has demonstrated the viability of combining renewable energy, energy storage, and demand response to reduce the need for new centralized generation capacity. SCE has conducted several rounds of DER procurement in the Los Angeles area since 2013. This procurement was intended to address capacity shortfalls caused by the retirement of the San Onofre Nuclear Generating Station and the natural-gas supply shortfalls caused by a methane leak at the Aliso Canyon gas storage facility.
Today, energy-storage systems embedded in commercial or industrial buildings across SCE’s service territory are used, often in combination with solar photovoltaics, to reduce customer load during grid emergencies. Such arrangements could be scaled up in a way that would benefit multiple parties: utilities would improve service reliability, DER owners would receive service fees from either utilities or market operators, and building owners would benefits in the form of bill savings and/or revenue sharing with DER owners. SCE’s DERs have already been called into action. During the heat waves of 2017 and 2018, SCE discharged energy-storage assets in commercial and industrial buildings to reduce customer load and respond to grid demand in real time.
San Diego Gas & Electric (SDG&E) has also positioned itself as a leader on demand response and proactive grid management. At a visit to SDG&E, MEA delegates learned that all meters in SDG&E’s systems are now “smart” meters, transmitting energy-consumption data in near-real time (instead of being read manually every month). Access to smart-meter data has enabled SDG&E to get creative with rate design. For example, special discounted rates now encourage electric-vehicle drivers to charge their cars during the day when there is an abundance of cheap renewable electricity from solar power. This saves drivers money while reducing strain on the power grid during evening periods of peak demand.
In California, a combination of new policies, market rules, and technologies mean that DERs are helping enhance grid reliability and help the state of California meet emissions-reduction goals while slashing customer bills. In Thailand, circumstances are different. Since wholesale power supplies in Thailand are not open to market competition, DER capacity cannot yet be aggregated for market sale. The MEA is also experimenting with a pilot program that allows blockchain-based peer-to-peer (P2P) trading of cheap, distributed solar power. Expansion of the program could radically transform Thailand’s conventional and centralized energy system into a modern and flexible system that takes full advantage of the benefits DERs can offer.
MEA delegates enjoyed learning about the similarities between Thailand’s energy landscape and the environment in which Portland General Electric Company operates in Oregon. Portland General Electric (PGE) is a vertically integrated utility. There is neither a competitive wholesale market nor competition at the retail level in its service territory. While PGE customers can’t choose among different power suppliers, they can choose among different distributed energy options. PGE’s Smart Grid Test Bed plan will rely on customer-hosted energy resources and smart-grid technology—including rooftop solar, energy storage, smart thermostats and electric water heaters, and electric vehicle charging—to achieve its goal of deep decarbonization (an 80% reduction in CO2 emissions below 1990 levels by 2050). PGE expects that around 900 MW (20% of its energy supply) will come from customer-hosted energy resources by 2050.
The study tour made it clear that while viable use cases may vary by state or country, DERs are no longer fringe technologies. Whether through third-party partnerships with utilities (as in California) or through innovative programs advanced by utilities directly (as in Portland and Thailand), the importance of DERs is growing everywhere. The more opportunities there are for stakeholders from different places to connect and learn from each other, the smoother the transition to a distributed energy future will be.