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Why Utilities are Making a Necessary Foray into Renewables

Last week, the Washington DC policy-focused publication The Hill ran an opinion piece titled "Why utilities are making a necessary foray into renewables." In this piece, the author recounts how difficult it was 30 years ago to install a small solar test facility but how much utilities have changed their tone on renewables in the years since-- analyzing why such a shift has taken place. 

The article recounts how the Public Utilities Regulatory Policies Act (PURPA) was passed in 1978 seeking to spur innovation by requiring the purchase of electricity from private plants employing new technologies, including renewables. But then the 1992 Energy Policy Act required utilities to give transmission to independent power generators, but came with a roll back in renewable incentives that resulted in a dormant U.S. renewable energy sector from the 1990s to the early 2000s. 

Since then, though, this article details how states adopted renewable portfolio standards, prices began to fall rapidly, and renewable industries ballooned. "The combined capacity of solar and wind generation grew from 9.5 GW in 2005 to 113 GW in 2017. 

In the end, though, the final three paragraphs were the most important, which I'll repeat verbatim: 

"Across the country, consumers on both sides of the political aisle have expressed their desire for more clean energy. A poll released in September 2018 found that 76 percent of likely voters support more action by the government to promote solar energy. Some utilities continue to resist these shifts. In November, voters in Nevada approved a ballot measure to require utilities to supply 50 percent of their energy from renewable sources, despite active opposition from the State's largest utility. 

While some utilities are attempting to block the growth of renewables in their service territories, others are embracing renewable energy. In October, the Northern Indiana Public Service Company (NIPSCO), a subsidiary of NiSource, once one of the most coal-reliant utilities in the country, announced that it could save customers between $1.2 billion to $2 billion by retiring its remaining coal generators and replacing them with a combination of renewable and gas generation over the next 10 years. Driven by lower costs and a host of other benefits, many utilities are adopting clean energy as a significant portion of their generation fleets.

The utility industry won't change quickly. Most utilities have large fleets of fossil and nuclear-powered facilities built around centralized transmission and distribution networks.  These systems change slowly. But smart utility companies are looking 20 years down the road and thinking about how they will compete in a new world of distributed generation. They can't afford not to do so."

So clean power has become a business imperative for these companies, going along with retiring coal plants. But that last point, that slow change (necessary due to the size and economics of their existing large fleets) means the change should start now, seemed most poignant to me. 

How does this article and its article strike you? 

 

 

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Matt Chester's picture

Thank Matt for the Post!

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Discussions

Bob Meinetz's picture
Bob Meinetz on Dec 20, 2018 8:05 pm GMT

"By the mid-1980s, these generators, particularly those utilizing new gas turbine technologies, were demonstrating that they could produce electricity more cheaply than large central station power plants owned by regulated utilities..."

If so, they were generating more emissions than "large central station power plants owned by regulated utilities" using the same new gas turbine technologies. Due to the inflexible, unyielding Second Law of Thermodynamics, splitting any task into pieces is more wasteful.

"...many utilities are adopting clean energy as a significant portion of their generation fleets...[but] the utility industry won't change quickly. Most utilities have large fleets of fossil and nuclear-powered facilities..."

Why would I expect Scott Brown, an attorney/venture capitalist by training, to have any understanding of thermodynamics, or know that nuclear energy is cleaner than renewables + gas? I wouldn't - but I wouldn't expect anyone to give serious consideration to what an attorney has to say about energy, either.

Matt Chester's picture
Matt Chester on Dec 20, 2018 8:56 pm GMT

Of course the scientists and engineers (many of whom do support that renewables can and will be an important piece of the clean energy future along with nuclear) are more of an authority on the technical parts-- but what I find interesting about this piece, and thus why I posted it, is because it's inclusion in The Hill and by a venture capitalist author shows the reach these topics are having and how those different circles (outside of our energy-specific bubble) are trending in that direction. I find it interesting not just what's being said, but who's saying it!

Bob Meinetz's picture
Bob Meinetz on Dec 20, 2018 10:15 pm GMT

Matt, I harbor no ill will toward renewables or any other clean way to generate electricity. But renewables always bring their ugly cousin to the party - gas - and like its fossil sisters and brothers, gas always overstays its welcome.

For that reason, renewables advocates have been the most virulent anti-nuclear protesters on the planet. They realize when nuclear is adopted in a grid, there's no longer any need for high-maintenance renewables - no need to mess with their intermittency, their variability, their expense, their huge land use footprint. And most of all, we don't have to put up with their ugly, obnoxious cousin...yechh.

Charles Botsford's picture
Charles Botsford on Dec 28, 2018 6:45 pm GMT

Matt,

Good article. Utilities see renewables as a path to future survival. In the US, nuclear and coal are in attrition mode. If Vogtle 3&4 ever come on line, they will be the last nuclear in the US (many reasons). Coal is in even worse shape--really fast attrition mode. In the past, solar was supported by gas. Currently, energy storage seems to be supplanting gas and likely will for solar in the future. Wind, though, especially offshore, appears to have extraordinarily high capacity factors--one recent offshore farm demonstrated a 63% capacity factor--and may not need energy storage support in the future. Coupled with coincident load, you can see why the recent East Coast offshore auction had crazy high bids.

Your one commenter's note on the second law of thermodynamics was interesting. As a ChemE grad student (long, long ago), I had to teach ChemE thermo to undergrads (not the easy version they teach to mechanical engineers). I liked the analogy to poker: 1st law--you can't win. 2nd law--you can't break even. 3rd law--you can't get out of the game. Entropy is a harsh mistress--maybe Heinlein said that. However, I don't believe the commenter's analogy to distributed energy and smaller scale systems was necessarily true, or had anything to do with the second law. I also wouldn't diss attorneys out of hand--though the endless attorney jokes make that so easy to do. I've actually worked with some very bright attorneys--I would never tell them that.

Matt Chester's picture
Matt Chester on Dec 28, 2018 7:45 pm GMT

You wouldn't diss attorneys, but you put down mechanical engineers and the easier thermodynamics class we had to take!?

I'm just kidding, I saw my ChemE friends' homework-- you are undoubtedly right about that :)

Thanks for your feedback, Charles!

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