And growing numbers of customers are getting on board with increasingly affordable renewable energy technologies, such as rooftop solar plus storage. For them, “saving money in the long run,” rather than reducing their carbon footprints, is the big motivator, found a 2019 EY study.8
Now is the time for distribution utilities to take action. Over the next decade, a massive acceleration in DER take-up is expected, which will have an inexorable impact on the way energy is generated, consumed and traded in the US. In fact, by 2030, at a compound annual growth rate (CAGR) of over 10%, distributed solar will produce 165 terawatt hours (TWh) of electricity.9 Battery storage, microgrids and EVs will also experience double-digit CAGRs over this period.
Evolving and digitizing the grid to channel these growing volumes of DERs warrants some serious investment. Aging infrastructure needs to be replaced, maintained and upgraded. The energy system must be hardened against more frequent and intense US weather events and made more resilient to the probability of cyber attacks.
The priority remains to provide safe, affordable and reliable electricity supply. But there are growing challenges around peak capacity planning and matching power supply from variable energy resources, such as solar and wind generation, to changing load profiles.
And the challenges become exacerbated with disruption behind the meter. For instance, simultaneous EV charging will create unpredictable loads on the system that could lead to demand surges and supply shortages in some neighborhoods.
Clarity is what delegates at the Denver workshop most want. They asked us: “How do we know what connections are going to be added; or when EVs are going to charge; or when rooftop solar will be generating so that we can just get on with balancing our electricity flows at the local level?”
Tackling all of these challenges, and the complexities they create, coincides with:
- A looming depression in utilities’ top-line revenues
- Loss of load from growth in distributed generation
- Slow regulatory progress, in some states, on participation in behind-the-meter (BTM) activities that could deliver alternative revenue streams
- Energy-efficiency programs — in 2017, utility programs saved enough electricity to power 22 million US homes for a year10 — which conflict with distribution utilities’ commercial objective of selling more electricity
There will be rewards, of course, not least from the electrification of transport, buildings and heating. The National Renewable Energy Laboratory (NREL) estimates that electricity consumption in the US will increase between 21% and 41% by 2050.11 This promises to offset, to some extent, revenue losses from energy-efficiency programs and distributed generation. Future success, however, will not be found in traditional activities but in pursuit of greater responsibilities and alternative revenue streams.